[sekhar]

Required: Using the direct method, convert the company’s income statement to a cash basis.


December 31
2002 2001
Cash $ 4 7
Accounts Receivable 36 29
Inventory 75 61
Plant and equipment 210 180
Accumulated depreciation (40) (30)
Total Assets $ 285 247

Accounts payable 45 39
Common stock 90 70
Retained earnings 150 138

Total liabilities and stockholders equity 285 247

For 2002, the company reported net income as follows:

Sales $ 500
Less cost of goods sold 300
Gross Margin 200
Less operating expenses 180
Net income 20

Dividends of $8 were declared and paid during 2002. There were no sales of plant and equipment during the year.

Listed below are the changes that have taken place in Luang Corporation’s balance sheet accounts as a result of the past years activities

Debit Balance Accounts Net Increase(decrease)
Cash (30,000)
Accounts Receivable 20,000
Inventory (60,000)
Prepaid Expenses 10,000
Long Term Investments 50,000
Plant and Equipment 120,000
Net Increase $110,000

(concluded) Net Increase
Credit Balance Accounts (Decrease)
Accumulated Depreciation $ 40,000
Accounts Payable 30,000
Accrued Liabilities 10,000
Taxes Payable 10,000
Bonds Payable (40,000)
Deferred Income Taxes ( 5,000)
Common Stock 20,000
Retained Earnings 45,000
Net Increase 110,000

The following additional information is available about last year’s activities:
a. The company sold equipment during the year for $ 40,000. The equipment had cost the company $ 120,000 when purchased, and it had $ 70,000 in accumulated depreciation at the time of sale.
b. Net income for the year was $ __?__
c. The balance in the Cash account at the beginning of the year was $ 100,000; the balance at the end of the year was $ __?____
d. The company declared and paid $ 35,000 in cash dividends during the year
e. Long-term investments that had costg $ 60,000 were sold during the year for $ 80,000.
f. The beginning and ending balances in the Plant and Equipment and Accumulated Depreciation accounts for the past year are given below:


Ending Beginning

Plant and Equipment $620,000 $500,000
Accumulated Depreciation $240,000 $200,000

g. If data are not given explaining the change in an account, make the most reasonable assumption as to the cause of the change.

Required: Using the indirect method, prepare a statement of cash flows for the past year.

[ScottGem]

Please read this note:
https://www.askmehelpdesk.com/showthread.php?t=22670
For this forum.

If you show us your work on this assignment we can critique it, but you are asking us to do the assignment for you.

[sekhar]

Please read this note:
https://www.askmehelpdesk.com/showthread.php?t=22670
for this forum.

If you show us your work on this assignment we can critique it, but you are asking us to do the assignment for you.

Yes,, I want work on this question

Thank you