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Homework answers / question archive / Presented below is information related to the operations of Tanner Corporation

Presented below is information related to the operations of Tanner Corporation

Business

Presented below is information related to the operations of Tanner Corporation.

                                                         December

                                                    2003           2002                                                                 2003                                       

Cash                                        $  55,000     $  40,000         Sales                          $380,000

Accounts receivable                    60,000         48,000         Cost of goods sold       190,000

Inventory                                     30,000         22,000         Gross profit                  190,000

Prepaid expenses                       15,000         20,000         Depreciation expense    14,000

Land                                            39,000         20,000         Other operating expenses           143,000

Building                                     100,000       100,000         Income from operations                                   33,000                   

Accumulated depreciation—                                               Loss on equipment sale                  3,000                                                     

  building                                     (17,000)        (8,000)        Income before income taxes                                             30,000

Equipment                                   58,000         80,000         Income tax expense         9,000

Accumulated depreciation—                                               Net income                 $  21,000

  equipment                                (15,000)      (20,000)

      Total                                  $325,000     $302,000        

 

Accounts payable                    $  40,000     $  29,000        

Bonds payable                                     0       100,000

Common stock                          200,000       100,000

Retained earnings                       85,000         73,000

      Total                                  $325,000     $302,000

 

Additional information:

(a)    In 2003, Tanner declared and paid a cash dividend.

(b)    The company converted $100,000 of bonds into common stock.

(c)    Equipment with a cost of $22,000 and a book value of $12,000 was sold for $9,000. Land was acquired for cash.

(d)    Prepaid expenses pertain to operating expenses; accounts payable pertains to merchan-dise purchases.

 

Instructions:  Solve either (a) or (b), but not both.

(a)   Prepare a statement of cash flows in proper form for 2003, using the indirect method.

(b)        Prepare a statement of cash flows in proper form for 2003, using the direct method

Option 1

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