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Kazaam Company, a merchandiser, recently completed its calendar-year 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s balance sheets and income statement follow.
KAZAAM COMPANY
Comparative Balance Sheets
December 31, 2011 and 2010
Assets 2011 2010
Cash $ 49,800 $ 73,500
Accounts receivable 65,810 51,000
Merchandise inventory 276,500 253,000
Prepaid expenses 1,250 1,900
Equipment 158,000 106,500
Accum. depreciation—Equipment (41,625) (52,000)
Total assets $ 509,735 $ 433,900
Liabilities and Equity
Accounts payable $ 59,810 $ 113,000
Short-term notes payable 9,000 6,000
Long-term notes payable 65,000 48,250
Common stock, $5 par value 162,750 150,500
Paid-in capital in excess of par, common stock 36,750 0
Retained earnings 176,425 116,150
Total liabilities and equity $ 509,735 $ 433,900
KAZAAM COMPANY
Income Statement
For Year Ended December 31, 2011
Sales $ 583,000
Cost of goods sold 285,000
Gross profit 298,000
Operating expenses
Depreciation expense $ 20,000
Other expenses 134,000 154,000
Other gains (losses)
Loss on sale of equipment 5,375
Income before taxes 138,625
Income taxes expense 24,250
Net income $ 114,375
Additional Information on Year 2011 Transactions
a.
The loss on the cash sale of equipment was $5,375 (details in b).
b.
Sold equipment costing $47,250, with accumulated depreciation of $30,375, for $11,500 cash.
c.
Purchased equipment costing $98,750 by paying $30,000 cash and signing a long-term note payable for the balance.
d.
Borrowed $3,000 cash by signing a short-term note payable.
e.
Paid $52,000 cash to reduce the long-term notes payable.
f.
Issued 2,450 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $54,100.
Required:
1.
Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
KAZAAM COMPANY
Comparative Balance Sheets
December 31, 2011 and 2010
Assets 2011 2010
Cash $ 49,800 $ 73,500
Accounts receivable 65,810 51,000
Merchandise inventory 276,500 253,000
Prepaid expenses 1,250 1,900
Equipment 158,000 106,500
Accum. depreciation—Equipment (41,625) (52,000)
Total assets $ 509,735 $ 433,900
Liabilities and Equity
Accounts payable $ 59,810 $ 113,000
Short-term notes payable 9,000 6,000
Long-term notes payable 65,000 48,250
Common stock, $5 par value 162,750 150,500
Paid-in capital in excess of par, common stock 36,750 0
Retained earnings 176,425 116,150
Total liabilities and equity $ 509,735 $ 433,900
KAZAAM COMPANY
Income Statement
For Year Ended December 31, 2011
Sales $ 583,000
Cost of goods sold 285,000
Gross profit 298,000
Operating expenses
Depreciation expense $ 20,000
Other expenses 134,000 154,000
Other gains (losses)
Loss on sale of equipment 5,375
Income before taxes 138,625
Income taxes expense 24,250
Net income $ 114,375
Additional Information on Year 2011 Transactions
a.
The loss on the cash sale of equipment was $5,375 (details in b).
b.
Sold equipment costing $47,250, with accumulated depreciation of $30,375, for $11,500 cash.
c.
Purchased equipment costing $98,750 by paying $30,000 cash and signing a long-term note payable for the balance.
d.
Borrowed $3,000 cash by signing a short-term note payable.
e.
Paid $52,000 cash to reduce the long-term notes payable.
f.
Issued 2,450 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $54,100.
Required:
1.
Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Accounting help please?
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