Comparative balance sheets and the statement of income and retained earnings for Bayshore Industries, Inc. are presented
Question:
Comparative balance sheets and the statement of income and retained earnings for Bayshore Industries, Inc. are presented below. Use this information to answer the subsequent questions.
Bayshore Industries, Inc. | | | |
BALANCE SHEETS | | | |
December 31, Year 2 and Year 1 | | | |
Year 2 | Year 1 | Change | |
Assets | |||
Current assets | |||
Cash and cash equivalents | $216,000 | $144,000 | $72,000 |
Trade receivables—net | 3,434,000 | 1,971,000 | 1,463,000 |
Inventory | 810,000 | 216,000 | 594,000 |
Prepaid expenses | 18,000 | 0 | 18,000 |
Total current assets | 4,478,000 | 2,331,000 | 2,147,000 |
Property and equipment | 7,780,000 | 7,740,000 | 40,000 |
Less: accumulated depreciation | 576,000 | 455,000 | 121,000 |
Property and equipment—net | 7,204,000 | 7,285,000 | (81,000) |
Intangibles, less accumulated amortization of $14,400—Year 2 and $7,200—Year 1 | 21,600 | 28,800 | (7,200) |
Total assets | $11,703,600 | $9,644,800 | $2,058,800 |
Liabilities and Stockholders' Equity | |||
Current liabilities | |||
Accounts payable and accrued expenses | $872,600 | $396,800 | $475,800 |
Line of credit | 108,000 | 90,000 | 18,000 |
Current portion of long-term debt | 29,000 | 27,000 | 2,000 |
Total current liabilities | 1,009,600 | 513,800 | 495,800 |
Long-term debt | 3,069,000 | 3,098,000 | (29,000) |
Total liabilities | 4,078,600 | 3,611,800 | 466,800 |
Stockholders' equity | |||
Common stock | 9,000 | 9,000 | 0 |
Additional paid-in capital | 5,400,000 | 5,400,000 | 0 |
Retained earnings | 2,216,000 | 624,000 | 1,592,000 |
Total stockholders' equity | 7,625,000 | 6,033,000 | 1,592,000 |
Total liabilities and stockholders' equity | $11,703,600 | $9,644,800 | $2,058,800 |
Bayshore Industries, Inc. | |
STATEMENT OF INCOME AND RETAINED EARNINGS | |
For the year ended December 31, Year 2 | |
Net sales | $19,800,000 |
Cost of sales | 9,000,000 |
Gross profit on sales | 10,800,000 |
Operating expenses | |
Selling expenses | 3,600,000 |
General and administrative expenses | 4,050,000 |
Other operating expenses | 393,300 |
Total operating expenses | 8,043,300 |
Operating income | 2,756,700 |
Other income and expenses | |
Gain/loss on property and equipment disposal | 18,000 |
Interest income | 9,000 |
Interest expense | (252,000) |
Other income and expenses—net | (225,000) |
Income before income taxes | 2,531,700 |
Provision for income taxes | 759,700 |
Net income | 1,772,000 |
Retained earnings—beginning | 624,000 |
Dividends paid | (180,000) |
Retained earnings—ending | $2,216,000 |
Additional information on transactions during the year ended December 31, Year 2:
All accounts receivable relate to customer sales |
All accounts payable relate to suppliers |
All fixed assets were acquired for cash |
A building with an original cost of $360,000 and accumulated depreciation of $319,500 was sold for $58,500 |
The company had no new long-term debt in Year 2 |
Interest paid in the current year was $250,000 |
Cash paid for income taxes in the current year was $700,000 |
There were no non-cash financing or investing activities during the year |
Required:
Using the indirect method, prepare the Statement of Cash Flows of Bayshore Industries, Inc. for the year ended December 31, Year 2.
Financial Accounting The Impact on Decision Makers
ISBN: 978-1285182964
9th edition
Authors: Gary A. Porter, Curtis L. Norton