Question:
The following balance sheet and income statement data were taken from the records of Harbaugh Auto Supply for the year ended December 31, 2018:
The company sells goods and provides services. All sales are made on account, and cash is received in advance on services with service revenues being recognized after services are performed.
Prepare the operating section of the statement of cash flows, and present it under both the direct and indirect methods.
Transcribed Image Text:
2017 2018 BALANCE SHEET $ 10,100 $ 8,400 Cash 13,900 Accounts receivable 14,400 Inventory 21,600 18,700 Interest receivable 1,200 1,500 Prepaid rent 2,600 1,400 $ 49,900 $ 43,900 Total current assets 32,100 Investments 35,400 Equipment (net) 98,000 91,700 $183,300 $167,700 Total $ 18,700 $ 21,300 Accounts payable Salaries and wages payable 9,800 11,200 Interest payable 2,300 1,700 Dividends payable 1,700 1,200 Income taxes payable 3,100 4,300 Unearned revenue 12,300 15,100 $ 47,900 $ 54,800 Total current liabilities Notes payable 68,300 62,800 Common stock 42,000 42,000 Retained earnings 25,100 8,100 $183,300 $167,700 Total INCOME STATEMENT Sales revenues $ 47,500 Service revenue 35,200 Interest revenue 9,300 Cost of goods sold (21,200) Salaries and wages expense (17,600) Rent expense (15,300) Interest expense (6,200) Depreciation expense (11,500) Add: Gain on disposal of plant assets 13,200 Net income before taxes $ 33,400 Income tax expense 9,100 Net income $ 24,300