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The Carpet Company's 19X2 and 19X1 balance sheets included the following items:
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12/31/2015
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Debits
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19X2($)
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19X1($)
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Cash .
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10500
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4000
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Accounts receivable
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8000
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9000
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Merchandise inventory
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21000
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18000
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Equipment.
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18000
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15000
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Totals
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57500
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46000
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Credits
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|
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Accumulated depreciation, equipment
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4,000
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3000
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Accounts payable
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7000
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5000
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Taxes payable
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1000
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2000
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Dividends payable
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1500
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0
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Common stock, $10 pay value
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27000
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25000
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Contributed capital in excess of par, common stock
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6000
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5000
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Retained earnings
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11000
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6000
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Totals
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57500
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46000
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The Carpet Company's income statement was as follows:
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CARPET COMPANY
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Income Statement
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For the Year Ended December 31, 19X2
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Sales
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$61,000
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Cost of goods sold
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$40,000
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Wages and other operating expenses
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$6,300
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Income tax expenses
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$4,200
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Depreciation expense
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$1,500
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$52,000
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Net Income
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$9,000
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Required:
Prepare the statement of cash flows under both the direct method and the indirect method for the year ended December 31, 19X2.
Additional information includes the following:
a. Equipment costing $3,500 was purchased during the year
b. Fully depreciated equipment that cost $500 was discarded and its cost and accumulated depreciation were removed from the accounts.
c. Two hundred shares of stock were sold and issued at $15 per share
d. The company declared $4,000 of cash dividends and paid $2,500.