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I need help doing a balance sheet and cash flow using direct/indirect method.
PART I
Presented below is the trial balance of Arbeid Corporation at December 31, 2014.
Debits
Credits
Cash
$ 197,000
Sales
$ 7,900,000
Trading Securities (at cost, $145,000)
153,000
Cost of Goods Sold
4,800,000
Long-term Investments in Bonds
299,000
Long-term Investments in Stocks
277,000
Short-term Notes Payable
90,000
Accounts Payable
455,000
Selling Expenses
2,000,000
Investment Revenue
63,000
Land
260,000
Buildings
1,040,000
Dividends Payable
136,000
Accrued Liabilities
96,000
Accounts Receivable
435,000
Accumulated Depreciation—Buildings
352,000
Allowance for Doubtful Accounts
25,000
Administrative Expenses
900,000
Interest Expense
211,000
Inventories
597,000
Extraordinary Gain
80,000
Long-term Notes Payable
900,000
Equipment
600,000
Bonds Payable
1,000,000
Accumulated Depreciation—Equipment
60,000
Franchise
160,000
Common Stock ($5 par)
1,000,000
Treasury Stock
191,000
Patent
195,000
Retained Earnings
78,000
Paid-in Capital in Excess of Par
80,000
Totals
$12,315,000
$12,315,000
Instructions: Prepare a balance sheet at December 31, 2014, for Arbeid Corporation. Ignore income taxes.
PART II
Comparative balance sheet accounts of Luke Inc. are presented below.
Luke Inc.
Comparative Balance Sheet Accounts
As of December 31, 2014 and 2013
December 31
Debit Accounts
2014
2013
Cash
$ 42,000
$ 33,750
Accounts Receivable
70,500
60,000
Merchandise Inventory
30,000
24,000
Investments (available-for-sale)
22,250
38,500
Machinery
30,000
18,750
Buildings
67,500
56,250
Land
7,500
7,500
$269,750
$238,750
Credit Accounts
Allowance for Doubtful Accounts
$ 2,250
$ 1,500
Accumulated Depreciation—Machinery
5,625
2,250
Accumulated Depreciation—Buildings
13,500
9,000
Accounts Payable
35,000
24,750
Accrued Payables
3,375
2,625
Long-Term Note Payable
21,000
31,000
Common Stock, no par
150,000
125,000
Retained Earnings
39,000
42,625
$269,750
$238,750
Additional data (ignoring taxes):
1.
Net income for the year was $42,500.
2.
Cash dividends declared and paid during the year were $21,125.
3.
A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized (debited) and common stock was credited.
4.
Investments that cost $25,000 were sold during the year for $28,750.
5.
Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200.
Luke’s 2014 income statement follows (ignoring taxes).
Sales
$540,000
Less: Cost of goods sold
380,000
Gross margin
160,000
Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts)
120,450
Income from operations
39,550
Other: Gain on sale of investments
$3,750
Loss on sale of machinery
(800)
2,950
Net income
$ 42,500
(a)
Compute net cash flow from operating activities using the direct method.
(b)
Prepare a statement of cash flows using the indirect method.
