Land costing $15,000.00 was sold for $15,000.00 2- Mortgage note was issued for $40,000.00 3- A building
Question:
Land costing $15,000.00 was sold for $15,000.00
2- Mortgage note was issued for $40,000.00
3- A building costing $115,000.00 was constructed.
4- 2,500 shares of common stock were issued at $40.00 in exchange for theBonds payable.
5- Cash dividends declared were $74,670.00
Prepare the:
1- Statement of cash flow - Direct method.
2- Statement of cash flow - Indirect method.
Dowling Company
Corporative Balance Sheet
December 31, 2012 and 2011
Assets | 2012 | 2011 |
Cash | $ 140,350.00 | $ 95,900.00 |
Account receivable (net) | $ 95,300.00 | $ 102,300.00 |
Inventories | $ 165,200.00 | $ 157,900.00 |
Prepaid expenses | $ 6,240.00 | $ 5,800.00 |
Investments (long term) | $ 35,700.00 | $ 84,700.00 |
Land | $ 75,000.00 | $ 90,000.00 |
Buildings | $ 375,000.00 | $ 260,000.00 |
Accumulated depreciations-buildings | $ (71,300.00) | $ (58,300.00) |
Machinery and equipment | $ 428,300.00 | $ 428,300.00 |
Accumulated depreciations-machinery and equipment | $ (148,500.00) | $ (138,000.00) |
Patents | $ 58,000.00 | $ 65,000.00 |
Total assets | $ 1,159,290.00 | $ 1,093,600.00 |
Liabilities and Stockholders Equity | ||
Accounts payable (merchandise creditors) | $ 43,500.00 | $ 46,700.00 |
Accrued expense payable (operating expense) | $ 14,000.00 | $ 12,500.00 |
Income taxes payable | $ 7,900.00 | $ 8,400.00 |
Dividends payable | $ 14,000.00 | $ 10,000.00 |
Dowling Company
Income Statement
For the Year Ended December 31, 2012
Sales | $ 1,100,000.00 | |
Cost of merchandise sold | $ 710,000.00 | |
Gross profit | $ 390,000.00 | |
Operating Expense: | ||
Depreciation Expense | $ 23,500.00 | |
Patent amortization | $ 7,000.00 | |
Other Operating expense | $ 196,000.00 | |
Total operating expense | $ 226,500.00 | |
Income from operations | ||
Other income: | ||
Gain on sale of investments | $ 11,000.00 | |
Other expenses: | ||
Interest expense | $ 26,000.00 | $ (15,000.00) |
Income before income tax | $ 148,500.00 | |
Income tax expense | $ 50,000.00 | |
Net Income | $ 98,500.00 |
Mortgage note payable, due 2023 | $ 40,000.00 | $ - |
Bonds payable | $ 150,000.00 | $ 250,000.00 |
Common stocks. $30.00 par | $ 450,000.00 | $ 375,000.00 |
Excess of issue over par-common stocks | $ 66,250.00 | $ 41,250.00 |
Retained earnings | $ 373,640.00 | $ 349,810.00 |
Total liabilities and stockholders equity | $ 1,159,290.00 | $ 1,093,660.00 |
Dowling Company
Statement of Cash Flow Indirect Method
December 31, 2012 and 2011
Cash flow from operating activities: | ||
Net Income | ||
Adjustments to reconcile net income to net cash flow from | ||
operating activities: | ||
Depreciation | ||
Amortization of patent | ||
Gain on sale of investments | ||
Changes in current operating assets and liabilities: | ||
Decrease in account receivable | ||
Increase in inventories | ||
Increase in prepaid expenses | ||
Decrease in accounts payable | ||
Increase in accrued expense payable | ||
Decrease in income taxes payable | ||
Net cash flow from operating activities | ||
Cash flow from investing activities: | ||
Cash received from sale of: | ||
Investments | ||
Land | ||
Less: Cash paid for construction of building | ||
Net cash flow used for investing activities | ||
Cash flow from financing activities: | ||
Cash received from issuing mortgage note payable | ||
Less; Cash paid for dividends | ||
Net cash flow used for financing activities | ||
Increase in cash | ||
Cash at the beginning of the year | ||
Cash at the end of the year | ||
Schedule of Noncash Investing and Financing Activities | $ 100,000.00 |
Dowling Company
Statement of Cash Flow - Direct Method
December 31, 2012 and 2011
Cash flow from operating activities: | ||
Cash received from customers | ||
Deduct: Cash paid for merchandise | ||
Cash paid for operating expenses | ||
Cash paid for interest expenses | ||
Cash paid for income taxes | ||
Net cash flow from operating activities | ||
Cash flow from investing activities: | ||
Cash received from sale of: | ||
Investments | ||
Land | ||
Less: Cash paid for construction of building | ||
Net cash flow used for investing activities | ||
Cash flow from financing activities: | ||
Cash received from issuing mortgage note payable | ||
Less; Cash paid for dividends | ||
Net cash flow used for financing activities | ||
Increase in cash | ||
Cash at the beginning of the year | ||
Cash at the end of the year | ||
Schedule of Noncash Investing and Financing Activities | $ 100,000.00 |
Expert Answer:
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Principles of Accounting
ISBN: 978-0618736614
10th edition
Authors: Belverd Needles, Marian Powers, Susan Crosson
