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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
.
|
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 |
|
Comparative Balance Sheets |
||||
| June 30 2016 and |
2015 |
|||
|
Assets |
||||
|
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 |
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 |
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 |
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.
