Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect

Use the following data for

ABC Music Co.

to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.

 ABC Music Co.

Income Statement

For the Year Ended June 30, 2016 

 

Net Sales    $350,000

Less Expenses

 

  Cost of Goods Sold      $200,000

  Depreciation Expense    20,000

  Administrative Expenses 52,000

  Selling Expenses    45,000

 Loss on Sale of Investment  500

 Total Expenses         317,500

Net Income                 $  32,500

  ABC Music Co.

Comparative Balance Sheets

June 30 2016 and 2015

 

Assets

                         2016              2015

Cash                 4,500           $ 15,000

Accounts Receivable (net)  35,000    27,500

Inventory        40,000              50,000

Prepaid Expenses   3,000     2,500

Long Term Investments   20,000   25,000

Plant and Equipment   80,000   40,000

Accumulated Depreciation (20,000)  (12,000)

Total Assets $162,500     $148,000

 

Liabilities

Accounts Payable    $   2,000   $   6,000

Wages Payable        220         260

Taxes Payable        780        740

Notes Payable   20,000   12,000

Total Liabilities  $23,000  $ 19,000

 

Stockholders’ Equity

Common Stock   $ 65,000   $  65,000

Retained Earnings    81,500    64,000

Total Paid in Capital and Retained Earnings   146,500  129,000

  Less: Treasury Stock       (  7,000)               0

Total Stockholders’ Equity    $139,500    $129,000

Total Liabilities and Stockholders’ Equity   $162,500  $148,000

 

Additional Information:

·   A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.

·  A long term investment was sold for $4,500.

·  The outstanding notes are long term. An $8,000 note was issued during 2016.

·  Common stock was repurchased.