The operations of the Kentucky Mike’s Hotel, a small hotel operation, are becoming more complex. Mike Ryan,
Question:
The operations of the Kentucky Mike’s Hotel, a small hotel operation, are becoming more complex. Mike Ryan, the owner, has asked for your help in preparing her statement of cash flows. He is able to present you with balance sheets and some additional information.
Kentucky Mike’s Hotel | |||
Balance Sheets | |||
December 31, 2020 and December 31, 2021 | |||
Assets | 2020 | 2021 | Change |
Cash | 20,000 | 33,000 | 13,000 |
Accounts Receivable | 49,000 | 47,000 | (2,000) |
Inventory | 50,000 | 55,000 | 5,000 |
Investments | 10,000 | 15,000 | 5,000 |
Land | 40,000 | 70,000 | 30,000 |
Building & Equipment | 250,000 | 225,000 | (25,000) |
Accumulated Depreciation | (50,000) | (25,000) | 25,000 |
Total Assets | 369,000 | 420,000 | 51,000 |
Liabilities & Stockholder's Equity | |||
Accounts Payable | 20,000 | 13,000 | (7,000) |
Salaries Payable | 5,000 | 2,000 | (3,000) |
Interest Payable | 2,000 | 4,000 | 2,000 |
Income Tax Payable | 8,000 | 7,000 | (1,000) |
Mortgage Payable (current) | 10,000 | 13000 | 3,000 |
Notes Payable | - | 30,000 | 30,000 |
Mortgage Payable (Long Term) | 57,000 | 80,000 | 23,000 |
Common Stock | 234,000 | 234,000 | -0- |
Treasury Stock | - | (8,000) | (8,000) |
Retained Earnings | 33,000 | 45,000 | 12,000 |
Total Liabilities & Stockholders’ Equity | 369,000 | 420,000 | 51,000 |
Additional information:
1. A building that originally cost $40,000 and whose book value was $10,000 was sold for $7,000.
2. Property was purchased by borrowing on a note for $30,000.
3. Dividends paid during 2021 totaled $13,000
4. Assume only dividends declared and net income affected the retained earnings account
5. Assume all current liabilities are paid on a timely basis
6. Assume that the current amount of the mortgage payable was reclassified from the noncurrent mortgage
Prepare the Statement of Cash Flow.
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb