Statement Of cash flows (direct method) :

Refer to Kazaam Company's financial statements and related information in Problem 12-1A

Required:

Prepare a complete statement of cash flows; report its operating activities according to the direct method. Disclose any non cash investing and financing activities in a note. Reference problem (12-1A) Statement of cash flows (indirect method)

Kazaam Company, a merchandiser, recently completed its calendar-year 2011 operations for the year, (1) all sales are credit sales,(2) all credits to Accounts Receivable reflect cash receipts from customers, (3 all purchases Of inventory are on credit,(4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses The company's balance sheets and income statement follow.

Additional Information on Year 2011 Transactions

a. The loss on the cash sale of equipment $5,125 (details in b).

b. Sold equipment costing $46,875 with accumulated depreciation of $28,125, for $13,625 cash.

c. Purchased equipment costing $96,375 by paying $25,000 cash and signing a long-term note payable for the balance.

d. Borrowed $3,750 cash by signing a short-term note payable.

e. Paid $31,375 cash to reduce the long-term notes payable.

f. Issued 2,500 Shares of Common Stock for $18 cash per Share.

g. Declared and paid cash dividends of $62,125.

Required:

1. Prepared a complete Statement Of cash flows; report its operating activities using the indirect method. Disclose any non cash investing and financing activities in a note.

Transcribed Image Text:

KAZAAM COMPANY Income Statement For Year Ended December 31, 2011 Sales.. Cost of goods sold Gross profit.. Operating expenses Depreciation expense Other expenses.. Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net Income.………………….. $496,250 250,000 246,250 $ 18,750 136,500 155,250 5,125 85,875 12.125 $ 73,750 KAZAAM COMPANY Comparative Balance Shoots December 31, 2011 and 2010 2011 Assets Cash Accounts receivable Merchandise Inventory Prepaid expenses Equipment Accum depreciation Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total abilities and equity *************** $ 53,875 65,000 273.750 5.375 159.500 (34.625) $522.875 $ 68,125 10.000 93,750 168.750 2010 $76,625 49,625 252.500 6.250 110,000 (44,000) $451,000 $116,625 6.250 53,750 156.250 32.500 129,750 118,125 $522.875 $451,000 KAZAAM COMPANY Income Statement For Year Ended December 31, 2011 Sales.. Cost of goods sold Gross profit.. Operating expenses Depreciation expense Other expenses.. Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net Income.………………….. $496,250 250,000 246,250 $ 18,750 136,500 155,250 5,125 85,875 12.125 $ 73,750 KAZAAM COMPANY Comparative Balance Shoots December 31, 2011 and 2010 2011 Assets Cash Accounts receivable Merchandise Inventory Prepaid expenses Equipment Accum depreciation Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total abilities and equity *************** $ 53,875 65,000 273.750 5.375 159.500 (34.625) $522.875 $ 68,125 10.000 93,750 168.750 2010 $76,625 49,625 252.500 6.250 110,000 (44,000) $451,000 $116,625 6.250 53,750 156.250 32.500 129,750 118,125 $522.875 $451,000

Answer rating: 100% (QA)

Non cash investing and financing activities purchased equipm... View the full answer