ACC 110 Chapter Notes - Chapter 5: Financial Statement, Accounts Receivable, Gross Profit

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Published on 6 Oct 2012
School
Ryerson University
Department
Accounting
Course
ACC 110
Professor
The financial statements of Tidman Inc. appear below:
TIDMAN INC.
Income Statement
Year Ended December 31, 2010
Sales
$235,000
Cost of goods sold
200,000
Gross profit
35,000
Operating expenses
18,000
Income from operations
17,000
Interest expense
2,000
Income before income taxes
15,000
Income tax expense
6,000
Net income
$ 9,000
TIDMAN INC.
Comparative Balance Sheet
December 31
2010
2009
Assets
Cash
$ 8,500
$ 10,000
Accounts receivable
15,500
17,000
Prepaid insurance
2,500
1,500
Inventory
16,000
7,500
Equipment
27,500
39,000
Accumulated depreciation
(10,000)
(12,000)
Total
$60,000
$63,000
Liabilities and Shareholder’s Equity
Accounts payable
$ 10,000
$ 11,500
Income taxes payable
6,000
5,000
Bank Loan
3,500
15,500
Common shares
19,500
12,000
Retained earnings
21,000
19,000
Total
$60,000
$63,000
The following additional data were provided:
1. During the year the company sold some equipment for $1,000 cash. The company
did not purchase any equipment during 2010.
2. Depreciation expense of $6,000 is included in the operating expenses category.
3. During the year the company issued common shares.
4. During the year the company repaid part of their bank loan.
5. During the year the company paid a cash dividend to the shareholders.
REQUIRED Prepare in proper format a Cash Flow Statement for Tidman Inc., using the
indirect method.
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