Q1 The comparative balance sheets for Year 2 and Year 1 as well as the statement...

  

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Q1 The comparative balance sheets for Year 2 and Year 1 as well as the statement of income for Year 2 are provided below for That's a Wrap: That's a Wrap Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Year 1 Cash 33,000 20,000 Accounts Receivable, less allowance for uncollectible accounts of 4,000 and 3,000 respectively 44,000 47,000 Dividends Receivable 3,000 2,000 Inventory 55,000 50,000 Long-term investment 15,000 10,000 Land 70,000 40,000 Building and equipment 225,000 250,000 accumulated depreciation (25,000) (50,000) Total Assets 420,000 369,000 Liabilities & Stockholders' Equity Liabilities Accounts payable 13,000 20,000 Salaries payable 2,000 5,000 Interest payable 4,000 2,000 Income tax payable 7,000 8,000 Notes payable 30,000 Bonds payable, less discount of 2,000 and 3,000 respectively 93,000 67,000 Stockholders' Equity Common Stock 210,000 200,000 Paid-in capital- excess of par 24,000 20,000 Retained Earnings 45,000 47,000 Treasury stock (8,000) Total Liabilities & Stockholders' Equity 420,000 369,000 That's a Wrap Balance Sheet December 31, Year 2 Sales Revenue 200,000 Cost of goods sold Gross profit 120,000 80,000 Operating Expenses Salaries expense 25,000 Depreciation expense Bad debt expense 5,000 1,000 loss on the sale of building 3,000 Operating income 46,000 Non-operating revenues/(expenses) Dividend revenue 3,000 Interest expense (8,000) Income before taxes 41,000 income tax expense 16,000 Net Income 25,000 Additional information: 1. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000. 2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment. 3. Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller. 4. On January 1, 2021, bonds were sold at their $25,000 face value. 5. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time. Required: Prepare a statement of cash flows for "That's a Wrap" using the direct method. Q1 The comparative balance sheets for Year 2 and Year 1 as well as the statement of income for Year 2 are provided below for That's a Wrap: That's a Wrap Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Year 1 Cash 33,000 20,000 Accounts Receivable, less allowance for uncollectible accounts of 4,000 and 3,000 respectively 44,000 47,000 Dividends Receivable 3,000 2,000 Inventory 55,000 50,000 Long-term investment 15,000 10,000 Land 70,000 40,000 Building and equipment 225,000 250,000 accumulated depreciation (25,000) (50,000) Total Assets 420,000 369,000 Liabilities & Stockholders' Equity Liabilities Accounts payable 13,000 20,000 Salaries payable 2,000 5,000 Interest payable 4,000 2,000 Income tax payable 7,000 8,000 Notes payable 30,000 Bonds payable, less discount of 2,000 and 3,000 respectively 93,000 67,000 Stockholders' Equity Common Stock 210,000 200,000 Paid-in capital- excess of par 24,000 20,000 Retained Earnings 45,000 47,000 Treasury stock (8,000) Total Liabilities & Stockholders' Equity 420,000 369,000 That's a Wrap Balance Sheet December 31, Year 2 Sales Revenue 200,000 Cost of goods sold Gross profit 120,000 80,000 Operating Expenses Salaries expense 25,000 Depreciation expense Bad debt expense 5,000 1,000 loss on the sale of building 3,000 Operating income 46,000 Non-operating revenues/(expenses) Dividend revenue 3,000 Interest expense (8,000) Income before taxes 41,000 income tax expense 16,000 Net Income 25,000 Additional information: 1. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000. 2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment. 3. Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller. 4. On January 1, 2021, bonds were sold at their $25,000 face value. 5. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time. Required: Prepare a statement of cash flows for "That's a Wrap" using the direct method.

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