Question

Chapter 13

1. The following financial statement data is available for the Scottsdale Company for Dec. 31, 2019. (30 pts)
   
   Comparative Balance Sheet Data
   
                                                                    2019                  2018
   Cash                                                    $ 39,835         $    4,000
   Accounts Receivable                               17,500             12,950
   Dividends Receivable                               1,000                      0
   Inventory                                                42,000             35,000
   Prepaid rent                                               3,000             12,000
   Prepaid insurance                                      2,100                  900
   Office supplies                                          1,000                  750
   Long-term investments                           20,000             30,000
   Land                                                    125,000         175,000
   Building                                              350,000         350,000
   Accumulated depreciation, Building (105,000)        (87,500)
   Equipment                                           525,000         400,000
   Accumulated depreciation, Equipment (130,000)      (112,000)
   Patent                                                      45,000             50,000
               Total assets                             $ 936,435       $ 871,100
   
   Accounts payable                                $    26,000       $   30,000
   Income taxes payable                                  5,000              4,000
   Wages payable                                            5,000              3,000
   Short-term notes payable                          10,000            10,000
   Dividends payable                                      1,500                   0
   Unearned Income                                           500              2,000
   Accrued Liabilities                                      5,303            10,853
   Long-term notes payable                          60,000            70,000
   Bonds payable                                         415,000          415,000
   Common stock ($10 par)                        290,000          220,000
   Paid-in capital in excess of par                 46,410            17,500
   Retained earnings                                    106,722            88,747
   Treasury Stock                                       (35,000)                     0       
               Total liabilities and equity      $ 936,435       $ 871,100
   
   
   Income Statement
   
   Sales revenue                                                                          $1,160,000
   Cost of goods sold                                                                  (    748,000)
   Gross profit                                                                                  412,000
   Operating expenses                                                                 (    276,400)
   Income from operations                                                               135,600
   Other revenues/expense
   Gain on sale of land                                         8,000
   Gain on sale of long-term investment             4,000
   Dividend revenue                                             2,400
   Interest expense                                            (51,750)           (     37,350)
   Income before taxes                                                                      98,250
   Income tax expense                                                                (     39,400)
   Net income                                                                                    58,850
   
   Instructions:
   • Create a Comparative Balance Sheet where you compute the dollar change in every account on the Balance Sheet.
   • For the Operating Section (Indirect Method):
     • Add or subtract accordingly all items you labeled as an Operating activity from the Balance Sheet
     • Adjust out anything included in Net Income that belongs in the Investing or Financing section
     • Add back Depreciation and/or Amortization Expense
     • Start with Net Income

Answer 1

Scottsdale Company Comparative Balance sheet For the period ending Dec 3:1 2019Increase Decrease 2018 4000 12950 Cash Accounts Receivable Dividends Receivable Invento Prepaid rent Prepaid insurance Office supplies Long-term investments Land Buildin Accumulated depreciation, Buildin Equipment Accumulated depreciation, Equipment-130000 18000 Patent Total assets 39835 17500 1000 42000 3000 2100 1000 35835 4550 1000 35000 9000 900 750 30000 250 100003 50000 175000 350000 105000 17500 525000 125000 350000 87500 112000 5000 936435 871100 Accounts payable Income taxes payable Wages payable Short-term notes payable Dividends pavable Unearned Income Accrued Liabilities Long-term notes payable Bonds payable Common stock ($10 par Paid-in capital in excess of par Retained earnings Treasury Stock 26000 5000 5000 10000 4000 30000 1000 3000 10000 500 5303 5550 10853 1000070000 415000 290000 70000 4641028 106722 17975 415000 28910 17500 88747 3500035000

Statement of Cashflows Indirect Method For the period ending Dec 31, 2018 Cashflow from Operating Activity Net Income Adjustment: Depreciation (17500 +18000) Amortisation of Patent Gain on sale of land Gain on sale of long-term investment Increase in Accounts Receivable Increase in Dividends Receivable Increase in Inventory Decrease in Prepaid Rent Increase in Prepaid Insurance Increase in Office Supplies Decrease in Accounts Payable Increase in Income Taxes Payable Increase in Wages Payable Increase in Dividends Payable Decrease in Unearned Income Decrease in Accrued Liabilities Cash generated from Operating Activity 35500 5000 8000 -4550 1000 -7000 9000 1200 -250 1000 1500 1500 555016950 75800 Cashflow from Investing Activity Equipment Purchased Land sold (50000 +8000) Long Term Investment sold (10000+400014000 Cash used for Investing Activity 58000 53000 Cashflow from Financing Long Term Notes paid off Common Stock issued Paid-in capital in excess of par Dividends paid (88747+58850 106722) Treasury Stock purchased Cash generated from Financing Activity Net Increase in Cash Beginning Cash Balance Ending Cash Balance 10000 70000 28910 -40875 35000 13035 35835 4000 39835