Question

Problem 12-12A

Condensed financial data of Whispering Winds Corp. appear below.

Problem 12-12A Condensed financial data of Whispering Winds Corp. appear below. Whispering Winds Corp. Comparative Balance Sheets December 31 Assets 2019 Cash $91,400 Accounts receivable 89,000 Inventory 122,000 Investments 84,500 Equipment 251,000 Accumulated depreciation equipment (48,100) $589,800 Liabilities and Stockholders' Equity Accounts payable $58,600 Accrued expenses payable 11,200 Bonds payable 102,000 Common stock 250,000 Retained earnings 168,000 $589,800 2018 $46,900 56,200 103,000 86,200 205,000 (40,200) $457,100 $ 47,200 18,900 69,500 197,000 124,500 $457,100 Whispering Winds Corp. Income Statement For the Year Ended December 31, 2019 Sales revenue Gain on disposal of equipment $299,000 8,000 307,000 Less: Cost of goods sold Operating expenses (excluding depreciation expense) Depreciation expense Income tax expense Interest expense $98,200 13,600 48,800 7,200 2,500 170,300 $136,700 Net income Additional information: 1. Equipment costing $92,500 was purchased for cash during the year. 2. Investments were sold at cost. 3. Equipment costing $46,500 was sold for $13,600, resulting in gain of $8,000. 4. A cash dividend of $93,200 was declared and paid during the year.

Answer 1

Whispering Winds Corp.
Worksheet-Statement of Cash Flows
Balance Sheet Account		Reconciling Items
	Balance 12/31/18	Debit	Credit	Balance 12/31/19
Debits
Cash	$                46,900.00	$    44,500.00		$            91,400.00
Accounts Receivable	$                56,200.00	$    32,800.00		$            89,000.00
Inventory	$              103,000.00	$    19,000.00		$          122,000.00
Investments	$                86,200.00		$      1,700.00	$            84,500.00
Equipment	$              205,000.00	$    92,500.00	$    46,500.00	$          251,000.00
Total	$              497,300.00			$          637,900.00
Credits
Accumulated Depreciation-Equipment	$                40,200.00	$    40,900.00	$    48,800.00	$            48,100.00
Accounts Payable	$                47,200.00		$    11,400.00	$            58,600.00
Accrued Expenses Payable	$                18,900.00	$      7,700.00		$            11,200.00
Bond Payable	$                69,500.00		$    32,500.00	$          102,000.00
Common Stock	$              197,000.00		$    53,000.00	$          250,000.00
Retained Earnings	$              124,500.00	$    93,200.00	$ 136,700.00	$          168,000.00
Total	$              497,300.00			$          637,900.00

Statement of Cash Flow Effects
	Reconciling Item
Operating activities
Net income	$ 136,700.00
Increase in accounts receivable		$    32,800.00
Increase in inventory		$    19,000.00
Increase in accounts payable	$    11,400.00
Decrease in accrued expenses payable		$      7,700.00
Depreciation expense	$    48,800.00
Gain on sale of equipment		$      8,000.00
Investing activities
Sale of investments	$      1,700.00
Sale of equipment	$    13,600.00
Purchase of equipment		$    92,500.00
Financing activities
Issuance of common stock	$    53,000.00
Issuance of bonds	$    32,500.00
Payment of dividends		$    93,200.00
Total	$ 297,700.00	$ 253,200.00
Increase in cash		$    44,500.00
Total	$ 297,700.00	$ 297,700.00