Gazelle Corporations current-year income statement, comparative balance sheets, and additional information follow. For the year, (1) All
Question:
Gazelle Corporation’s current-year income statement, comparative balance sheets, and additional information follow. For the year,
(1) All sales are credit sales,
(2) All credits to Accounts Receivable reflect cash receipts from customers,
(3) All purchases of inventory are on credit, and
(4) All debits to Accounts Payable reflect cash payments for inventory.
Required
1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose any noncash investing and financing activities in a note.
Analysis Component
2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment.
Transcribed Image Text:
GAZELLE CORPORATION GAZELLE CORPORATION Comparative Balance Sheets Income Statement At December 31 Current Year Prior Year For Current Year Ended December 31 Assets Sales. $1,185,000 Cash $123,450 $ 61,550 Cost of goods sold 595,000 Accounts receivable 77,100 80,750 Gross profit. 590,000 Inventory . Prepaid expenses Total current assets. 240,600 250,700 Operating expenses (excluding depreciation) . 362,850 15,100 17,000 Depreciation expense 38,600 456,250 410,000 188,550 Equipment . 262,250 200,000 Other gains (losses) Accum. depreciation-Equipment Total assets (110,750) $607,750 (95,000) $515,000 Loss on sale of equipment. (2,100) Income before taxes. 186,450 Liabilities and Equity Income taxes expense 28,350 Accounts payable $ 17,750 $102,000 Net income $ 158,100 Long-term notes payable 115,000 87,500 Total liabilities 132,750 189,500 Additional Information on Current-Year Transactions a. The loss on the cash sale of equipment was $2,100 (details in b). b. Sold equipment costing $51,000, with accumulated depreciation of $22,850, for $26,050 cash. c. Purchased equipment costing $113,250 by paying $43,250 Equity Common stock, $5 par 215,000 200,000 Paid-in capital in excess of par, common stock 30,000 cash and signing a long-term notes payable for the balance. d. Paid $42,500 cash to reduce the long-term notes payable. e. Issued 3,000 shares of common stock for $15 cash per shareate W f. Declared and paid cash dividends of $53,600. Retained earnings.. 230,000 125,500 Total liabilities and equity $607,750 $515,000 Go to Settings
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Part 1 Noncash investing and financing activities Purchased equipment for 96375 by signing a 66375 longterm notes pay able and paying 30000 in cash Pa...View the full answer
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