ACCTG 102 Lecture Notes - Lecture 13: Net Income, Preferred Stock, Accrual
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| IKIBAN INC. | ||||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Cash | $ | 96,500 | $ | 56,200 | ||||
| Accounts receivable, net | 69,300 | 51,400 | ||||||
| Inventory | 66,600 | 96,800 | ||||||
| Prepaid expenses | 5,100 | 6,400 | ||||||
| Total current assets | 237,500 | 210,800 | ||||||
| Equipment | 135,200 | 120,000 | ||||||
| Accum. depreciationâEquipment | (28,900 | ) | (10,500 | ) | ||||
| Total assets | $ | 343,800 | $ | 320,300 | ||||
| Liabilities and Equity | ||||||||
| Accounts payable | $ | 26,900 | $ | 32,200 | ||||
| Wages payable | 7,100 | 16,700 | ||||||
| Income taxes payable | 2,500 | 4,100 | ||||||
| Total current liabilities | 36,500 | 53,000 | ||||||
| Notes payable (long term) | 42,000 | 70,000 | ||||||
| Total liabilities | 78,500 | 123,000 | ||||||
| Equity | ||||||||
| Common stock, $5 par value | 240,000 | 189,000 | ||||||
| Retained earnings | 25,300 | 8,300 | ||||||
| Total liabilities and equity | $ | 343,800 | $ | 320,300 | ||||
| IKIBAN INC. | ||||||
| Sales | $ | 673,000 | ||||
| Cost of goods sold | 407,000 | |||||
| Gross profit | 266,000 | |||||
| Operating expenses | ||||||
| Depreciation expense | $ | 53,000 | ||||
| Other expenses | 66,900 | |||||
| Total operating expenses | 119,900 | |||||
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| 146,100 | |||||
| Other gains (losses) | ||||||
| Gain on sale of equipment | 2,600 | |||||
| Income before taxes | 148,700 | |||||
| Income taxes expense | 59,480 | |||||
| Net income | $ | 89,220 | ||||
a. A $28,000 note payable is retired at its $28,000 carrying (book) value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $63,800 cash.
d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,600 gain.
e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f. All purchases and sales of inventory are on credit.
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(2) Compute the company's cash flow on total assets ratio for its fiscal year 2015.
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.
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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.
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