The Towne Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012
Question:
The Towne Company's income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow:
TOWNE COMPANY Income Statement For the Year Ended December 31, 2013 | ||
---|---|---|
Service Fees Earned | $443,800 | |
Dividend and Interest Income | 19,600 | |
$463,400 | ||
Wages and Other Operating Expenses | $399,000 | |
Depreciation Expense | 72,800 | |
Franchise Amortization Expense | 14,000 | |
Loss on Sale of Equipment | 9,800 | |
Gain on Sale of Investments | (23,800) | 471,800 |
Net Income | $-8,400 |
TOWNE COMPANY Balance Sheets | ||
---|---|---|
Dec. 31, 2013 | Dec. 31, 2012 | |
Assets | ||
Cash | $60,200 | $50,400 |
Accounts Receivable | 18,200 | 25,200 |
Interest Receivable | - | 5,600 |
Prepaid Expenses | 22,400 | 11,200 |
Long-term Investments-available for Sale | - | 98,000 |
Fair Value Adjustment to Investments | - | 14,000 |
Plant Assets | 974,400 | 917,000 |
Accumulated Depreciation | (327,600) | (259,000) |
Franchise | 127,400 | 40,600 |
Total Assets | $875,000 | $903,000 |
Liabilities and Stockholders' Equity | ||
Accrued Liabilities | $16,800 | $19,600 |
Notes Payable | - | 37,800 |
Common Stock ($10 par value) | 833,000 | 749,000 |
Retained Earnings | 53,200 | 82,600 |
Unrealized Gain on Investments | - | 14,000 |
Treasury Stock | (28,000) | - |
Total Liabilities and Stockholders' Equity | $875,000 | $903,000 |
During the year, the following transactions occurred:
1. Sold equipment for $12,600 cash that originally cost $26,600 and had $4,200 accumulated depreciation.
2. Sold long-term investments that had cost $98,000 for $121,800 cash. Unrealized gains totaling $14,000 related to these investments had been recorded in earlier years. At year-end, the fair value adjustment and unrealized gain account balances were eliminated.
3. Paid cash to extend the company's exclusive franchise for another three years.
4. Paid off a note payable at the bank on January 1.
5. Declared and paid a $21,000 dividend.
6. Purchased treasury stock for cash.
7. Acquired land valued at $84,000 by issuing 8,400 shares of common stock.
Required
a. Compute the change in cash that occurred in 2013.
b. Prepare a statement of cash flows using the direct method. Use one cash outflow for "cash paid for wages and other operating expenses." Accounts payable relates to inventory purchases only.
a. Change in Cash during 2013
b. Use a negative sign with cash outflow answers.
TOWNE COMPANY Statement of Cash Flows For Year Ended December 31, 2013 | ||
---|---|---|
Cash Flow from Operating Activities | ||
Cash Received from Customers | Answer | |
Cash Received as Dividends and Interest | Answer | Answer |
Cash Paid for Wages and Other Operating Expenses | Answer | |
Cash Provided by Operating Activities | Answer | |
Cash Flow from Investing Activities | ||
Sale of Equipment | Answer | |
Sale of Investments | Answer | |
Extension of Franchise | Answer | |
Cash Provided by Investing Activities | Answer | |
Cash Flow from Financing Activities | ||
Payment of Notes Payable | Answer | |
Payment of Dividends | Answer | |
Purchase of Treasury Stock | Answer | |
Cash Used by Financing Activities | Answer | |
Net Change in Cash | Answer | |
Cash at Beginning of Year | Answer | |
Cash at End of Year | Answer |
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward