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Homework answers / question archive / The comparative balance sheet for Last Assignment, Inc

The comparative balance sheet for Last Assignment, Inc

Accounting

The comparative balance sheet for Last Assignment, Inc. is as follows: Current Prior Year Year Assets Cash $172,300 $58,000 Accounts Receivable 108,500 115,000 Inventory 153,400 149,600 Prepaid Insurance 1,200 4,800 Land 0 10,000 Equipment 318,500 268,500 Accumulated Depreciation -80,100 -66,100 Total Assets $673,800 $539,800 Liabilities & Stockholders' Equity Accounts Payable $110,000 $98,000 Note Payable (due in 5 years) 20,000 0 Common Stock 30,000 10,000 Additional Paid-in Capital, Common Stock 190,000 150,000 Retained Earnings 323,800 281,800 Total Liabilities & Stockholders' Equity $673,800 $539,800 Additional data obtained from the current year income statement and from a review of the general ledger reveals the following 1. Net Income from Income Statement was $62,000. 2. Depreciation Expense reported on the Income Statement was $44,000. 3. Equipment was purchased at a cost of $90,000. 4. Equipment with an original cost of $30,000 and accumulated depreciation of $20,000 was sold for $ 8,000. 5. Fully depreciated equipment costing $10,000 with no residual value was discarded (1.e. thrown away). 6. $20,000 was received upon issuing the Note Payable. 7. Commons stock was issued for cash 8. Cash dividends declared and paid amounted to $ 20,000. 9. The current year balance for Land is zero because it was sold for $50,000 during the current year. Required: Using the indirect method, prepare a Cash Flow Statement for the current year.

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Last Assignment inc

Cash Flow statement:

For the year ended 20XX

Particulars Amount ($) Amount ($)
Cash Flow from operating Cash Flows:    
Net income for the year :   62,000
Adjustments to reconcile net incom to net cash flow    
from operation activities.    
Add: Depreciation (Note 1) 44,000  
Add: Loss on sale of equipment ( Note 2) 2,000  
Less: Profit on sale of Land ( Note 3 ) ( 40,000)  
Changes in Current Operating Assets & Liabilities    

Add: Decrease in Account receivables

6,500  
Add: Decrease in Prepaid Insurance 3,600  
Add: Increase in Accouonts Payables 12,000  
Less: Increase in Inventory (3,800)  
Net Cash flow from Operating Activities   86,300
Cash flow from Investing Activities:    
Add: Sale of Equipment 8,000  
Less: Purchase of Equipment (90,000)  
Add: Sale of Land 50,000  
Net Cash flow from Investing Activities   (32,000)
Cash flow from Financing Activities:    
Add: Issue Of Common Stock 20,000  
Add: Issue Of Additinal paid in capital 40,000  
Less: Dividend Paid (20,000)  
Net Cash flow from Financing Activities   40,000
Increase in Cash   94,300
Cash at the beginning of the year 58,000  
Add: Cash received from notes Paybles(in Bank) 20,000  
Cash at the end of the year   1,72,300

Working notes

Note 1: Depreciation

1) Cureent year Depreciation = $ 44,000

2) Increase/(decrease) in accumulated depreciation = $ (80,100 - 66,100) = $ 14,000

3) An equipment sold with an accumulated depreiation of $ 20,000

4) A fully depreciated equipment discarded ( with no residual value) = $ 10,000

Note 2:  Losson sale of equipment

(Cost - Accumulated depreciation) - Sale value = $ [ ( 30,000 - 20,000) - 8,000) ] = $ 2,000