ACG-2021 Lecture Notes - Lecture 8: Treasury Stock, Current Liability, Deferral
Document Summary
Get access
Related Documents
Related Questions
The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:
PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 | ||||
2018 | 2017 | |||
Assets: | ||||
Current assets: | ||||
Cash | $ | 142,950 | $ | 154,000 |
Accounts receivable | 76,800 | 90,500 | ||
Inventory | 92,000 | 77,300 | ||
Prepaid rent | 3,400 | 1,700 | ||
Long-term assets: | ||||
Land | 465,000 | 465,000 | ||
Equipment | 762,000 | 655,000 | ||
Accumulated depreciation | (421,000) | (262,000) | ||
Total assets | $ | 1,121,150 | $ | 1,181,500 |
Liabilities and Stockholders' Equity: | ||||
Current liabilities: | ||||
Accounts payable | $ | 96,000 | $ | 82,300 |
Interest payable | 6,750 | 13,500 | ||
Income tax payable | 7,400 | 4,700 | ||
Long-term liabilities: | ||||
Notes payable | 112,500 | 225,000 | ||
Stockholders' equity: | ||||
Common stock | 685,000 | 685,000 | ||
Retained earnings | 213,500 | 171,000 | ||
Total liabilities and stockholders' equity | $ | 1,121,150 | $ | 1,181,500 |
Additional Information for 2018:
1. Net income is $66,000.
2. The company purchases $107,000 in equipment.
3. Depreciation expense is $159,000.
4. The company repays $112,500 in notes payable.
5 .The company declares and pays a cash dividend of $23,500.
Required:
Prepare the statement of cash flows using the indirect method.
|
The balance sheet for Plasma Screens Corporation along with additional information, are provided below:
PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 | ||||
2018 | 2017 | |||
Assets: | ||||
Current assets: | ||||
Cash | $ | 82,000 | $ | 120,000 |
Accounts receivable | 72,000 | 96,000 | ||
Inventory | 65,000 | 80,000 | ||
Prepaid rent | 5,000 | 4,000 | ||
Long-term assets: | ||||
Land | 500,000 | 500,000 | ||
Equipment | 800,000 | 600,000 | ||
Accumulated depreciation | (380,000) | (300,000) | ||
Total assets | $ | 1,144,000 | $ | 1,100,000 |
Liabilities and Stockholders' Equity: | ||||
Current liabilities: | ||||
Accounts payable | $ | 78,000 | $ | 82,000 |
Interest payable | 5,000 | 9,000 | ||
Income tax payable | 9,000 | 7,000 | ||
Long-term liabilities: | ||||
Notes payable | 75,000 | 150,000 | ||
Stockholders' equity: | ||||
Common stock | 600,000 | 600,000 | ||
Retained earnings | 377,000 | 252,000 | ||
Total liabilities and stockholders' equity | $ | 1,144,000 | $ | 1,100,000 |
Additional Information for 2018:
1. Net income is $160,000.
2. The company purchases $200,000 in equipment.
3. Depreciation expense is $80,000.
4. The company repays $75,000 in notes payable.
5. The company declares and pays a cash dividend of $35,000.
Prepare the statement of cash flows using the indirect method.
|
P23-3 (SCF—Direct Method) MortonsonCompany has not yet prepared a formal statement of cash flows forthe 2014 fiscal year. Comparative balance sheets as of December 31,2013, and 2014, and a statement of income and retained earnings forthe year ended December 31, 2014, are presented below. | |||
MORTONSON COMPANY | |||
Statement of Income and Retained Earnings | |||
For The Year Ended December 31, 2014 | |||
($000 Omitted) | |||
Sales | $3,800 | ||
Expenses | |||
Cost of goods sold | $1,200 | ||
Salaries and benefits | 725 | ||
Heat, light, and power | 75 | ||
Depreciation | 80 | ||
Property taxes | 19 | ||
Patent amortization | 25 | ||
Miscellaneous expenses | 10 | ||
Interest | 30 | 2,164 | |
Income before income taxes | 1,636 | ||
Income taxes | 818 | ||
Net income | 818 | ||
Retained earnings - January 1, 2014 | 310 | ||
1,128 | |||
Stock dividend declared and issued | 600 | ||
Retained earnings - December 31, 2014 | $528 | ||
MORTONSON COMPANY | |||
Comparative Balance Sheet | |||
December 31 | |||
($000 Omitted) | |||
Assets | 2014 | 2013 | |
Current assets | |||
Cash | $333 | $100 | |
U.S. Treasury notes (Available-for-sale) | 10 | 50 | |
Accounts receivable | 780 | 500 | |
Inventory | 720 | 560 | |
Total current assets | 1,843 | 1,210 | |
Long-term assets | |||
Land | 150 | 70 | |
Buildings and equipment | 910 | 600 | |
Accumulated depreciation | (200) | (120) | |
Patents (less amortization) | 105 | 130 | |
Total long-term assets | 965 | 680 | |
Total assets | $2,808 | $1,890 | |
Liabilities and Stockholders' Equity | |||
Current liabilities | |||
Accounts payable | $420 | $330 | |
Income taxes payable | 40 | 30 | |
Notes payable | 320 | 320 | |
Total current liabilities | 780 | 680 | |
Long-term notes payable - due 2016 | 200 | 200 | |
Total liabilities | 980 | 880 | |
Stockholders' equity | |||
Common stock outstanding | 1,300 | 700 | |
Retained earnings | 528 | 310 | |
Total stockholders' equity | 1,828 | 1,010 | |
Total liabilities and stockholders' equity | $2,808 | $1,890 | |
Instructions: | |||
Prepare a statement of cash flows using the direct method.Changes in accounts receivable and in accounts payable relate tosales and cost of sales. Do not prepare a reconciliationschedule. | |||
MORTONSON COMPANY | |||
Statement of Cash Flows | |||
For The Year Ended December 31, 2014 | |||
($000 omitted) | |||
Cash flows from operating activities | |||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Title | Amount | Formula | |
Net cash provided by operating activities | Formula | ||
Cash flows from investing activities | |||
Title | Amount | ||
Title | Amount | ||
Title | Amount | ||
Net cash used by investing activities | Formula | ||
Increase in cash | Amount | ||
Title | Amount | ||
Title | Formula | ||
(a) Sales | Amount | ||
Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Cash receipts (collections from customers) | Formula | ||
(b) Cost of goods sold | Amount | ||
Add: Title | Amount | ||
Title | Formula | ||
Deduct: Title | Amount | ||
Title | Formula | ||
Deduct: Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Cash purchases (payments for merchandise) | Formula | ||
| |||
(c) Income taxes | Amount | ||
Title | Amount | ||
Formula | |||
Add: Title | Amount | ||
Income taxes (cash) | Formula | ||