The records of British Columbia Limited (BCL) provided the following data for the year ended December 31,
Question:
The records of British Columbia Limited (BCL) provided the following data for the year ended December 31, 2020:
Comparative Balance Sheet Data
2020 | 2019 | Change | ||
Debits | ||||
Cash balances…………………………………. | $54,300 | $21,000 | $33,300 | |
Short term investments…….…………… | 8,000 | 10,000 | (2,000) | |
Accounts receivable………………………….. | 61,000 | 36,000 | 25,000 | |
Inventory…………………………………………… | 30,000 | 20,000 | 10,000 | |
Land…………………………………………………. | 25,000 | 60,000 | (35,000) | |
Machinery………………………………………….. | 120,000 | 110,000 | 10,000 | |
Other assets……………………………………… | 39,000 | 29,000 | 10,000 | |
Total debits | $337,300 | $286,000 | ||
Credits | ||||
Accumulated depreciation………………… | $21,900 | $20,000 | 1,900 | |
Accounts payable………………………………. | 52,000 | 36,000 | 16,000 | |
Salaries payable……………………………….. | 2,000 | 5,000 | (3,000) | |
Income taxes payable……………………… | 3,400 | 1,000 | 2,400 | |
Deferred tax liability……………………….. | 5,000 | 1,000 | 4,000 | |
Accrued pension liability………………… | 7,000 | 3,000 | 4,000 | |
Bonds payable…………………………………. | 55,000 | 70,000 | (15,000) | |
Asset Retirement Obligation………….. | 25,000 | 20,000 | 5,000 | |
Common shares……………………………….. | 116,000 | 100,000 | 16,000 | |
Preferred shares………………………………. | 5,000 | 0 | 5,000 | |
Contributed surplus………………………….
| 0 | 1,000 | (1,000) | |
Retained earnings………………………….. | 45,000 | 29,000 | 16,000 | |
Total credits | $337,300 | $286,000 |
Income Statement
For the year ended December 31, 2020
Sales revenue……………………………. | $136,000 | |||
Cost of goods sold…………………….. | (45,700) | |||
Salaries and Benefits………………… | (31,900) | |||
Other expenses……………………….. | (10,900) | |||
Interest expense………………………. | (6,000) | |||
Gain on sale of land………………… Gain on sale of machinery……… | 13,000 3,000 | |||
Income tax expense……………….. | (12,500) | |||
Net income | $45,000 |
BCL does not apply Cash Equivalents in preparing its Statement of Cash Flows.
- Retired $20,000 face value bonds, which also equaled their carrying value, by issuing common shares. Issued bonds for cash.
- Paid $17,000 to repurchase and retire $14,000 book value of common shares.
- Declared, for common shares, a stock dividend and declared and paid cash dividends in 2020. There were no other common share transactions.
- There were no land purchases during the year.
- Sold machinery costing $10,000 which was 50% depreciated.
- Purchased machinery for cash.
- Other expenses include depreciation.
- Sold short term investments for cash, at carrying value.
- Acquired other assets; ½ paid in cash and ½ by issuing preferred shares. No other asset disposals occurred in 2020 and there were no other preferred share transaction.
In accounting for the Asset Retirement Obligation BCL assumes a 5% interest rate and reports all changes between the period end balances in the income
Prepare, in good form, the Statement of Cash Flows under direct and indirect both formats