Depreciation reported on the income statement, $72,975. 1 answer below »

PR 16-2A Statement of cash flows—indirect method

The comparative balance sheet of Hinson Enterprises, Inc. at December 31, 2013 and 2012, is as follows

Dec. 31, 2013

Dec. 31, 2012

Assets

Cash

$ 128,275

$ 157,325

Accounts receivable (net)

196,525

211,750

Merchandise inventory

281,400

261,800

Prepaid expenses

11,725

8,400

Equipment

573,125

469,875

Accumulated depreciation—equipment

(149,450)

(115,675)

$1,041,600

$ 993,475

Liabilities and Stockholders’ Equity

Accounts payable (merchandise creditors)

$ 218,925

$ 207,900

Mortgage note payable

0

294,000

Common stock, $1 par

91,000

21,000

Paid-in capital in excess of par—common stock

455,000

280,000

Retained earnings

276,675

190,575

$1,041,600

$ 993,475

c

a. Net income, $220,500.

b. Depreciation reported on the income statement, $72,975.

c. Equipment was purchased at a cost of $142,450, and fully depreciated equipmentc osting $39,200 was discarded, with no salvage realized.

d. The mortgage note payable was not due until 2014, but the terms permitted earlier payment without penalty.

e. 7,000 shares of common stock were issued at $35 for cash.

f. Cash dividends declared and paid, $134,400.

Instructions

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

 

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