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This is the very last question for my assignment. Please prepare in a Word Document. Thank you.
The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company’s current accounts:
|
19X5 |
19X4 |
Increase / Decrease) |
||
|
Current assets |
||||
|
Cash |
$55,400 |
$35,200 |
$20,200 |
|
|
Accounts receivable (net) |
83,800 |
88,000 |
-4,200 |
|
|
Inventory |
243,400 |
233,800 |
9,600 |
|
|
Prepaid expenses |
25,400 |
24,200 |
1,200 |
|
|
Current liabilities |
||||
|
Accounts payable |
$123,600 |
$140,600 |
($ |
17,000 |
|
Taxes payable |
43,600 |
49,200 |
-5,600 |
|
|
Interest payable |
9,000 |
6,400 |
2,600 |
|
|
Accrued liabilities |
38,800 |
60,400 |
-21,600 |
|
|
Note payable |
44,000 |
The accounts payable were for the purchase of merchandise. Prepaid expenses and accrued liabilities relate to the firm’s selling and administrative expenses. The company’s condensed income statement follows.
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SIGN GRAPHICS INC. |
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|
Income Statement |
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|
for the Year Ended December 31, 20×5 |
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|
Sales |
$713,800 |
|
|
Less: Cost of goods sold |
323,000 |
|
|
Gross profit |
$390,800 |
|
|
Less: Selling & administrative expenses |
$186,000 |
|
|
Depreciation expense |
||
|
Interest expense |
27,000 |
230,000 |
|
Add: gain on sale of land |
$160,800 |
|
|
21,800 |
||
|
Income before taxes |
$182,600 |
|
|
Income taxes |
36,800 |
|
|
Net income |
$145,800 |
Other data:
1.
Long-term investments were purchased for cash at a cost of $74,600.
2.
Cash proceeds from the sale of land totaled $76,200.
3.
Store equipment of $44,000 was purchased by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock.
4.
A long-term note of $49,400 was repaid.
5.
Twenty thousand shares of common stock were issued at $5.19 per share.
6.
The company paid cash dividends amounting to $128,600.
Instructions:
a.
Prepare the operating activities section of the company’s statement of cash flows, assuming use of:
1. The direct method.
2. The indirect method.
b.
Prepare the investing and financing activities sections of the statement of cash flows.
