Question

Blake Weaver, Cook Enterprises' controller, is preparing the financial statements for 2016. He has completed the comparative balance sheets and income statement, which follow, and has gathered this additional information: On December 31, 2016, Cook sold a piece of equipment with an original cost of $25,000 for $30,000 cash. The equipment had a book value of $13,000. On February 1, 2016, Cook issued $100,000 of common stock to raise cash in anticipation of the purchase of a new building later in the year. On February 2, 2016, Cook took out a ten-year $75,000 long-term loan to provide the remaining funds needed to purchase the building. On May 15, 2016, Cook paid $150,000 for the new building. The company repaid $4,600 of the long-term debt before the end of the year. Cook Enterprises Income Statement For the Year Ended December 31, 2016 Sales revenue $1.070,000 Gain on equipment sale 17.000 Total revenue 1.087.000 Cost of goods sold 700.000 Operating expenses Depreciation expense $30,000 Interest expense 7.400 Wages expenses 175,000 Other expenses 16.000 228.400 Income before taxes Tax expense 63,400 Net income $95.200 Cook Eaterpers Comparative Balance Sheets As of December 31 2016 2016 $124.200 Accounts recen t Total current Propert iment Accumulated depreciation Net property, plant, & ciment Acco Acerede Mortgage payable Common shock SOS.400 Total holders' equity Total Babies & stockholders' equity 5743,400

Answer 1

a) Collection from customers $1,052,600 Workings: Cash collected from customers Beginning Accounts Receivable $269,800 + Sales $1,070.000 - Ending Accounts Receivable -$287,200 $1,052.600 b) Payments to suppliers $747,000 Workings: Purchase from suppliers - Beginning Inventory + cost of goods sold + Ending Inventory -$95.000 $700.000 $125.000 $730,000 Cash paid for suppliers Beginning Accounts Payable + purchase from suppliers - Ending Accounts Payable $120,000 $730.000 -$103.000 $747,000 c) Payments to employees $178,000 workings: Cash paid for employees Beginning wages payable + wages expenses - Ending wages payable $30,000 $175,000 -$27,000 $178,000 d) Payments for other expenses (including interest expense) $28,400 Workings: Cash paid other expenses (including interest expense) Beginning Accrued liabilities $25,000 + Other expenses $16.000 + Interest expenses $7,400 - Ending wages payable -$20,000 $28.400 e) Payments for income taxes $65,800 Workings: Cash paid for income tax Beginning Taxes payable + Tax expense - Ending Taxes payable $20.000 $63,400 -$17,600 $65.800