Below are the financial statements of Meteor Company: Meteor Company Income Statements For the Year Ended January
Question:
Below are the financial statements of Meteor Company:
Meteor Company | |
Income Statements | |
For the Year Ended January 31, 2028 | |
Sales, net | $152,000 |
Cost of goods sold | 61,000 |
Gross profit | 91,000 |
Operating expenses | 45,000 |
Operating income | 46,000 |
Interest expense | 5,000 |
Interest before taxes | 41,000 |
Income taxes | 13,000 |
Net income | $28,000 |
Meteor Company | ||
Balance Sheets | ||
January 31 | ||
2028 | 2027 | |
Cash | $11,000 | $6,000 |
Accounts receivable, net | 22,000 | 17,000 |
Inventory | 31,000 | 37,000 |
Prepaid insurance | 6,500 | 5,000 |
Property, plant and equipment | 49,000 | 45,000 |
Accumulated depreciation | (15,500) | (13,000) |
Total assets | $104,000 | $97,000 |
Accounts payable | $13,000 | $12,000 |
Salaries payable | 7,200 | 9,400 |
Dividends payable | 1,800 | 1,100 |
Income taxes payable | 5,000 | 9,000 |
Bank loan payable | 6,000 | 11,500 |
Common shares | 9,000 | 5,000 |
Retained earnings | 62,000 | 49,000 |
Total liabilities and shareholders’ equity | $104,000 | $97,000 |
Additional information:
1) Operating expenses are composed of: Depreciation $7,000; Salaries $25,000; Gain on Sale of Equipment $5,000; Other operating expenses $18,000.
2) Other operating expenses are cash expenses.
3) Equipment was purchased during the year for $12,000 cash.
4) Equipment was sold for cash during the year. The original cost of the equipment was $8,000 and the accumulated depreciation was $4,500.
5) Dividends were declared and paid during the year.
Required:
Prepare a cash flow statement for the year ended January 31, 2028 using the direct method and indirect method.
Financial Accounting
ISBN: 978-0077862268
2nd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann