Problem - The Extra Surplus Company's Balance Sheet for December 31, 2015 and the Income Statement for 2016 are shown below.
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Extra Surplus Company Balance Sheet December 31, 2015
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Assets
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Cash
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$16,000
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Accounts Receivable
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8,000
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Inventory
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19,200
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Property and Equipment, Net
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32,000
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$75,200
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Liabilities and Stockholders' Equity
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Account Payable
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$16,000
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Notes Payable, Long-term
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8,000
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Common Stock
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32,000
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Retained Earnings
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19,200
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$75,200
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Extra Surplus Company Income Statement For the Year Ended December 31, 2016
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Sales
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$28,600
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Cost of goods Sold
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6,600
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Salaries and Wage Expense
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6,600
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Interest Expense
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2,200
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Other Expense
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1,100
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Net Income
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$12,100
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Additional data:
Sales were $28,600; $17,600 in cash was received from customers.
Bought new land for cash, $22,000.
Sold other land for its book value of $11,000.
Paid $2,200 principal on the long-term note payable and $2,200 in interest. Issued new shares of stock for $22,000 cash.
Cash dividends of $3,400 were declared and paid to stockholders.
Paid $12,700 on accounts payable.
No inventory purchases were made; other expenses were incurred on account. All wages were paid in cash.
Other expenses were on account.
Required:
a. Prepare a balance sheet at December 31, 2016.
b. Prepare the statement of cash flows using the direct method.