Sugar Barrel Antiques Ltd.'s comparative balance sheet at June 30, 2014, and its 2014 income statement are as follows:

Other information for the year ended June 30, 2014:
a. Acquired equipment by issuing a long-term note payable, $76,500, and paying $5,000 cash.
b. Purchased a long-term investment for cash.
c. Received cash for issuance of common shares, $40,000.
d. Only cash dividends were issued during the year.
e. Paid short-term note payable by issuing common shares.
Required
1. Prepare the cash flow statement of Sugar Barrel Antiques Ltd. for the year ended June 30, 2014, using the direct method to report operating activities. Also prepare a note to the financial statements providing a summary of noncash investing and financing activities. All current accounts, except short-term notes payable, result from operating transactions.
2. Prepare a supplementary schedule showing cash flows from operations by the indirect method.

Transcribed Image Text:

SUGAR BARREL ANTIQUES LTD Balance Sheet June 30, 2014 and 2013 2014 2013 Current assets Cash Accounts receivable Interest receivable Inventories Prepaid expenses $ 188,00043,000 241,500 18,000 301,000 14,000 26,000 368,000 480,000 $1,619,000 $1,491,500 370,000 14,500 343,000 18,500 50,500 422,500 212,000 Long-term investment Plant and equipment, net Land Current liabilities Notes payable, short-ternm 67,000 90,500 201,500 (for general borrowing) Accounts payable Income tax payable Accrued liabilities Interest payable Salaries payable Long-term note payable 48,500 14,500 13,000 237,000470,500 256000 324,500 $1,619,000 $1491,500 234,500 69,000 41,000 18,500 4,500 Common shares 319,500 628,000 SUGAR BARREL ANTIQUES LTD Income Statement For the Year Ended June 30, 2014 Net sales Cost of goods sold Gross margin Operating expenses: $1,327,000 402,000 925,000 Salaries expense Amortization expense Other expenses $194,000 27,000 210,000 431,000 494,000 Operating income Other revenues and expenses: Revenues and gains: Interest revenue 53,000 Expenses and losses: Interest expense (30,500) Loss on sale of land Income before income taxes Income tax expense Net income 483,000 49,500 S 433,500