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1. The comparative balance sheet of Fox Company, for the current year and the preceding year ended December 31, appears below in condensed form:
|
Current Year |
Preceding Year |
|||
|
Cash |
$ 45,000 |
$ 53,500 |
||
|
Accounts receivable (net) |
51,300 |
58,000 |
||
|
Inventories |
147,200 |
135,000 |
||
|
Investments |
0 |
60,000 |
||
|
Equipment |
493,000 |
375,000 |
||
|
Accumulated depreciation-equipment |
(113,700) |
(128,000) |
||
|
$622,800 |
$553,500 |
|||
|
======== |
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|
Accounts payable |
$ 61,500 |
$ 42,600 |
||
|
Bonds payable, due 2008 |
100,000 |
|||
|
Common stock, $10 par |
250,000 |
200,000 |
||
|
Paid-in capital in excess of par–common stock |
75,000 |
50,000 |
||
|
Retained earnings |
236,300 |
160,900 |
The income statement for the current year is as follows:
|
Sales |
$623,000 |
|
|
Cost of merchandise sold |
348,500 |
|
|
Gross profit |
$274,500 |
|
|
Operating expenses: |
||
|
Depreciation expense |
$24,700 |
|
|
Other operating expenses |
75,300 |
100,000 |
|
Income from operations |
$174,500 |
|
|
Other income: |
||
|
Gain on sale of investment |
$ 5,000 |
|
|
Other expense: |
||
|
Interest expense |
12,000 |
(7,000) |
|
Income before income tax |
$167,500 |
|
|
Income tax |
64,100 |
|
|
Net income |
$103,400 |
|
Additional data for the current year are as follows:
|
(a) |
Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000. |
|
(b) |
Bonds payable for $100,000 were retired by payment at their face amount. |
|
(c) |
5,000 shares of common stock were issued at 15 for cash. |
|
(d) |
Cash dividends declared and paid. |
|
(e) |
All sales are on account. |
Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities.
