NAME: Complete the following four problems on separate paper. Be sure to include all working papers, computations, etc. Each problem is worth twenty-five points. 1. The following financial information is provided for Wilson Corporation for the calendar year end of 2009. All sales were on credit, all credits to Accounts Receivables reflect cash receipts from customers, all purchases of inventory were on credit, all debits to Accounts Payable reflect cash payments for inventory and Other Expenses are paid in advance and initially debited to Prepaid Expenses. WILSON CORPORATION Comparative Balance Sheets December 31, 2009 and 2008 _2009 2008 Assets Cash WILSON CORPORATION Income Statement For Year Ended December 31, 2009 3585.000 285,000 300,000 Sales - Cost of goods sold ..... Gross prolit..... Operating expenses Depreciation expense ........... Other expenses .............. Total operating expenses.. Accounts receivable Merchandise Inventory Prepaid expenses ........ Equipment ............ Accum. depreciation-Equipment.... Total assets ......- $ 49.400 65. 230 277.000 1.250 158,500 (36.625) $515,355 $ 74.000 55,000 252.000 1.600 197.500 (46,000) 5444.100 $ 20,000 134.000 154.000 146,000 Liabilities and Equity Accounts payable ..... . .. Short-term notes payable Long-term notes payable . . . Common stock, $5 par Pald-in capital in excess of par, common stock ............. Retained earnings ................ Total liabilities and equity ..... ... Other gains (losses) Loss on sale of equipment Income before taxes... Income taxes expense..... Net Income ........... $ 55.380 9,000 70.000 162.500 $112.000 7.0002 48,250 150,750 5,625 140.375 24,250 $116,125 35,250 183.225 $515.355 1 26.100 $444,100 Additional information you have extracted from the General Ledger accounts reflect: 1. Equipment was sold that had an original cost of $46,500 with accumulated depreciation of $29,375 for $11,500 cash. This resulted in a loss on the sale of $5,625. 2. Equipment was purchased costing $97,500 by paying a cash down payment of $25,000 and signing a long term note payable for the balance. 3. A short term note payable was signed for a $2,000 cash borrowing. 4. Paid $50,750 cash to reduce the long term notes payable. 5. Issued 2,350 share of common stock for $20 cash per share. 6. Dividends were declared and paid in the amount of $59,000. REQUIRED: 1. Prepare a complete statement of cash flows report utilizing the IN Indirect method. Disclose any noncash investing and financing activities in a note to the cash flow statement. 2. Analyze and discuss the statement of cash flows prepared. 2. The comparative financial statement for Danno Corporation is shown below. DANNO CORPORATION Comparative Balance Sheets December 31, 2010, 2009, and 2008 2010 2009 Assets Current assets ............. $ 53,776 $ 42,494 $ 55,118 Long-term investments .... 4110 Plant assets, net .......... ... 99,871 106,303 64.382 Total assets ..... ........... $153.647 $149,197 $123,610 Liabilities and Equity Current liabilities .............. $ 22,432 $ 22.230 $ 21.632 Common stock 70,000 70.000 52.000 Other paid-in capital ... .. 8.750 8,750 5.778 Retained earnings ..... 52.465 48.217 44.200 Total abilities and equity. .. $153,647 $149,197 $123.610 DANNO CORPORATION Comparative Income Statements For Years Ended December 31, 2010, 2009, and 2008 2010 2009 2008 $392,000 $300.304 $208.400 Cost of goods sold .......... 235.984 190,092 133.376 Gross profit 156,016 110,212 75,024 Selling expenses 55,664 41.442 27,509 Administrative expenses....... 35,200 26.427 17,297 Total expenses 20,944 67,869 44,806 Income before taxes 65,072 42,340 30.218 Income taxes 12.10) 8,680 Net Income $ 52,969 $ 33.663 $ 24.094 6.134