Test Your Knowledge

ComparativeBalance Sheet

For the Year Ended 2017 and 2016

2017 2016

Assets

Cash $156,500 $115,000

Marketable Securities 34,000 22,000

Accounts Receivable 8,000 10,000

Inventory 27,000 15,000

Prepaid expenses 1,500 2,000

Plant assets 80,000 100,000

Accumul deprec (29,000) (30,000)

Total Assets $278,000 $234,000

Liabilities & Owner's Equity

Accounts payable $7,000 $4,000

Note payable short-term 26,000 12,000

Interest payable 4,000 3,000

Income tax payable 9,000 6,000

Bonds payable 42,000 50,000

Common stock 145,000 135,000

Retained earnings 45,000 24,000

Total liabilities & OE $278,000 $234,000

1. Sold plant assets for $ 60,000. Their book was $ 53,000.

2. Marketable securities sold for $ 15,000

3. Purchased plant assets by paying 22,000 down and financing the remainder using a short-term note.

Sales $100,000

Cost of goods sold 40,000

Gross Profit $60,000

Operating expenses

Depreciation exp $8,000

General exp 10,000 $18,000

Operating income 42,000

Other revenue and expenses

Gain on sale of plant assets $7,000

Loss on sale of marketable securities (2,000)

Interest exp (3,000) 2,000

Income from continuing operations 44,000

Income tax 17,600

Net income $26,400

Prepare cash flow analysis using indirect method. Prepare cash flow analysis for operations using indirect method.

(Direct method is extra credit only)