Q13SE Preparing the direct method stat... [FREE SOLUTION]

Chapter 14: Q13SE (page 773)

Preparing the direct method statement of cash flows Use the data in Short Exercise S14A-12 and your results. Prepare the business鈥檚 complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities.

Expert verified

Net increase in cash is $6,500 and cash balance as on 30 June, 2018 is $47,500.

Cash flows from operating activities
Receipts:
Collection from customers	$188,000
Payments:
To suppliers	($115,000)
To employees	($66,000)
Net cash provided by operating activities		$7,000

Amy鈥檚 Learning Centre Statement of cash flows Year ended 30 June, 2018
Cash flows from operating activities		$7,000

Cash flows from investing activities
Cash purchase of equipment	($39,000)
Cash receipt from sale of land	$58,000
Net cash used for investing activities		$19,000

Cash flows from financing activities
Cash payment of dividends	($7,500)
Cash payment of notes payable	($34,000)
Cash receipt from issuance of stock	$22,000
Net cash provided by financing activities		($19,500)
Net Increase/(Decrease) in cash		$6,500
Cash balance, 30 June, 2017		$41,000
Cash balance, 30 June, 2018		$47,500

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ROUSE EXERCISE EQUIPMENT, INC. Income statement Year ended December 31, 2018
Net sales revenue	\(713,000
Cost of goods sold	342,000
Gross Profit	371,000
Operating expense:
Depreciation expense	54,000
Other operatin expenses	210,000
Net Income	\)107,000

ROUSE EXERCISE EQUIPMENT, INC. Comparative Balance sheet December 31, 2018 and 2017
	2018	2017
Assets
Current assets:
Cash	17,000	16,000
Accounts receivable	57,000	46,000
Merchandise inventory	79,000	90,000
Long term assets:
Plant assets	260,500	216,400
Accumulated depreciation-Plant assets	(38,500)	(32,400)
Investments	96,000	73,000
Total assets	\(471,000	\)409,000

Liabilities
Current liabilities
Accounts payable	72,000	71,000
Salaries payable	3,000	5,000
Long-term liabilities
Notes payable	61,000	69,000
Total liabilities	136,000	145,000

Stockholder鈥檚 equity
Common stock, no par	45,000	34,000
Retained earnings	290,000	230,000
Total stockholder鈥檚 equity	335,000	264,000
Total liabilities and stockholder鈥檚 equity	\(471,000	\)409,000