Label Corporation's recent comparative balance sheets and income statement, along with additional information follow. Balance Sheets, December
Question:
Label Corporation's recent comparative balance sheets and income statement, along with additional information follow.
| Balance Sheets, December 31 | Prior Year | Current Year |
|---|---|---|
| Assets | ||
| Cash and cash equivalents | $135,000 | $279,000 |
| Accounts receivable | 270,000 | 256,500 |
| Allowance for doubtful accounts | (13,500) | (18,000) |
| Inventory | 90,000 | 135,000 |
| Prepaid insurance | 21,600 | 12,600 |
| Fixed assets | 720,000 | 729,000 |
| Accumulated depreciation | (180,000) | (144,000) |
| Land | 360,900 | 729,900 |
| Total assets | $1,404,000 | $1,980,000 |
| Liabilities and Stockholders' Equity | ||
| Accounts payable | $90,000 | $99,000 |
| Salaries payable | 18,000 | 9,000 |
| Interest payable | ? | 9,000 |
| Notes payable, long-term | 180,000 | 414,000 |
| Common stock, no-par | 900,000 | 1,224,000 |
| Retained earnings | 216,000 | 225,000 |
| Total liabilities and stockholders' equity | $1,404,000 | $1,980,000 |
| Income Statement, For Year | Current |
|---|---|
| ended December | Year |
| Sales revenue | $720,000 |
| Cost of goods sold | (315,000) |
| Depreciation expense | (45,000) |
| Bad debt expense | (9,000) |
| Insurance expense | (9,000) |
| Interest expense | (18,000) |
| Salaries expense | (108,000) |
| Income tax expense | (27,000) |
| Other expenses, including loss | |
| on sale of fixed assets | (135,000) |
| Net income | $54,000 |
Additional information 1. Wrote o? $4,500 accounts receivable as uncollectible. 2. Sold a ?xed asset for $36,000 cash (cost, $135,000; accumulated depreciation, $81,000). 3. Issued common stock for $45,000 cash. 4. Declared and paid a cash dividend, $45,000. 5. Purchased land, $180,000 cash. 6. Acquired land for $189,000 and issued common stock as payment in full. 7. Acquired ?xed assets, cost $144,000; issued a $144,000, three-year, interest-bearing note payable. 8. Paid a $90,000 long-term note installment by issuing common stock to the creditor. 9. Borrowed cash on long-term note, $180,000.
Required
Create a statement of cash flows using the indirect method to report cash flows from operating activities, investing activities, and financing activities ?Note: Include a negative sign (-) for any amount that would be subtracted in the statement of cash flows.
Expert Answer:
Cash Flows from Operating Activities Net Income 54000 Adjustments Depreciation Expense 45000 Bad Debt Expense 9000 Loss on Sale of Fixed Assets 135000 Changes in Working Capital Increase in Accounts R... View the full answer
