Question

XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: Current Year Previous Year Balance Sheet at December 31 Cash $ 34,960 $ 30,000 Accounts Receivable 35,800 28,400 Inventory 41,800 38,400 Equipment 127,000 104,000 Accumulated Depreciation—Equipment (30,800 ) (25,400 ) Total Assets $ 208,760 $ 175,400 Accounts Payable $ 36,800 $ 27,400 Salaries and Wages Payable 1,360 1,600 Note Payable (long-term) 41,600 48,000 Common Stock 91,000 73,000 Retained Earnings 38,000 25,400 Total Liabilities and Stockholders’ Equity $ 208,760 $ 175,400 Income Statement Sales Revenue $ 124,000 Cost of Goods Sold 72,000 Other Expenses 39,400 Net Income $ 12,600 Additional Data: Bought equipment for cash, $23,000. Paid $6,400 on the long-term note payable. Issued new shares of stock for $18,000 cash. No dividends were declared or paid. Other expenses included depreciation, $5,400; salaries and wages, $20,400; taxes, $6,400; utilities, $7,200. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.

Answer 1

$12.600 XS Supply Company Statement of Cash Flows For current year ended December 31 Cash flows from operating activities Net Income Adjust to reconcile net income to Net cash provided by operating activities & change in working capital Depreciation Expenses Increase in Accounts receivable Increase in Inventory Increase in Accounts Payable Decrease in Salaries and Wages Payable $5,400 -$7.400 -$3.400 $9.400 -$240 $3,760 $16,360 Net cash Provided by operating activities Cash flows from investing activities Purchase of Equipment Net cash Provided (Used) by investing activities -$23,000 -$23,000 Cash flows from financing activities Payment of long term note payable Issued of common stock Net cash Provided (Used) by financing activities -$6.400 $18.000 $11,600 Net cash procced Add: Beginning cash and cash equivalent Ending cash and cash equivalent $4.960 $30.000 $34,960