Problem:
Additional information:
| Company X |
|
|
|
| Debits |
|
31-Dec-05 |
01-Jan-05 |
| Cash and Cash Equivalents |
|
$ 176,400 |
$ 58,000 |
| Accounts Receivable |
|
32,000 |
26,600 |
| Inventory |
|
21,000 |
25,400 |
| Prepaid Insurance |
|
5,600 |
4,000 |
| Lomg-Term Investments (at cost) |
|
6,000 |
16,800 |
| Equipment |
|
80,000 |
66,000 |
| Treasury Stock (at cost) |
|
10,000 |
20,000 |
| Cost of Goods Sold |
|
368,000 |
|
| Operating Expenses |
|
185,000 |
|
| Income Tax Expense |
|
37,600 |
|
| Loss on Sale of Equipment |
|
1,000 |
|
|
Total Debits |
$ 922,600 |
$216,800 |
|
|
|
|
| Credits |
|
31-Dec-05 |
01-Jan-05 |
| Accumulated Depreciation -Equipment |
$ 19,000 |
$ 18,000 |
| Accounts Payable |
|
7,000 |
11,200 |
| Interest Payable |
|
1,000 |
2,000 |
| Income Tax Payable |
|
12,000 |
8,000 |
| Notes Payable- Long Term |
|
16,000 |
24,000 |
| Common stock |
|
110,000 |
100,000 |
| Paid-in Capital in Excess of Par |
|
32,000 |
30,000 |
| Retained Earnings |
|
19,600 |
23,600 |
| Sales |
|
704,000 |
|
| gain on Sale of Long-Term Investments |
2,000 |
|
|
Total Credits |
$ 922,600 |
$216,800 |
a) all purchases and sales were on account
b) equipment costing $10,000 was sold for $3,000; a loss of $1,000 was recognized on the sale
c) the operating expenses included depreciation expense of $7,000; interest expense of $2,800; and insurance expense of $2,400 equipment was purchased during the year by issuing common stock and by paying balance ($12,000) in cash treasury stock was sold for $4,000 less than it cost; the decrease in owner's equity was recorded by reducing Retained Earnings.
No dividends were paid during the year.
1. Prepare a statement of cash flow for the year ended December 31, 2005, using direct method of reporting cash flows from operating activities
2. Prepare separate statement of cash flow using indirect method for the year ended December 31, 2005.
3. Prepare an income statement, for the year ended December 31, 2005.