The following information was taken from the financial records of Bower Manufacturing Industries: The company purchased equipment
Question:
The company purchased equipment in exchange for 10,000 shares of common stock. The stock was selling for $20 per share at that time. The notes receivable was received from a customer in exchange for the sale of inventory.
REQUIRED:
Prepare a statement of cash flows for the year ended December 31, 2018, using both the direct and indirect methods.
Transcribed Image Text:
INCOME STATEMENT 2018 $ 190,000 Sales (80,000) Cost of goods sold Depreciation expense (30,000) Interest expense (10,000) Salaries and wages expense (12,000) (7,000) Supplies expense (4,000) Loss on sale of investments Loss on disposal of plant assets (10,000) $ 37,000 Net income 2018 BALANCE SHEETS 2017 $ 747,000 $ 593,000 Cash Short-term investments 85,000 140,000 Accounts receivable 450,000 400,000 Supplies 10,000 12,000 Inventory 175,000 150,000 Notes receivable 100,000 50,000 500,000 Equipment 550,000 Less: Accumulated depreciation (75,000) (90,000) $2,002,000 $1,795,000 Total assets $ 60,000 $ 95,000 Accounts payable Salaries and wages payable 10,000 10,000 Bonds payable 500,000 500,000 BALANCE SHEETS Discount on bonds payable Common stock ($10 par value) Additional paid-in capital 2018 2017 (5,000) 200,000 (10,000) 100,000 800,000 300,000 900,000 Retained earnings 337,000 Total liabilities and shareholders' equity $2,002,000 $1,795,000
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Direct method Bower Manufacturing Industries Statement of Cash Flows For the Year Ended December 31 2018 Cash flows from operating activities Cash collections from sales and accounts receivable 90000 ...View the full answer
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