Star land Corporation provided the following comparative balance sheets and income statement. Star land Corporation Income Statement
Question:
Star land Corporation provided the following comparative balance sheets and income statement.
Star land Corporation
Income Statement
For the Year Ended December 31
Current Year
Sales……………………………………………. $ 1,875,050
Cost of Goods Sold……………………………... 1,125,030
Gross Profit……………………………………… $ 750,020
Selling, General, and Administrative Expenses…. $ 205,000
Bad Debt Expense……………………………….. 4,394
Depreciation Expense……………………………. 39,525
Total Operating Expenses………………………… $ 248,919
Income before Interest and Taxes………………… $ 501,101
Loss on Disposal of Equipment………………….. $ (50,000)
Interest Expense…………………………………... (12,500)
Income before Tax………………………………… $ 438,601
Income Tax Expense………………………………. (175,440)
Net Income………………………………………… $ 263,161
Additional Information:
1. Starland did not acquire any additional plant assets during the current year.
2. Starland sold equipment with a carrying value of $ 429,404 at a $ 50,000 loss.
3. The company borrowed additional funds by issuing a long-term note. Any debt payments made during the year reduced the current portion of long-term debt.
Required
Prepare the cash flow statement for Starland Corporation for the current year using the indirect method. Provide all required disclosures.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella