Comparative balance sheet accounts of Waterway Inc. are presented below. WATERWAY INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,900 Accounts Receivable 70,600 60,300 Inventory 30,100 24,100 Equity investments 22,000 38,900 Machinery 30,300 18,700 Buildings 67,900 55,700 Land 7,600 7,600 $270,900 $239,200 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500 Accumulated Depreciation—Machinery 5,600 2,200 Accumulated Depreciation—Buildings 13,500 8,900 Accounts Payable 34,700 24,500 Accrued Payables 3,500 2,600 Long-Term Notes Payable 21,000 30,800 Common Stock, no-par 150,000 125,000 Retained Earnings 40,300 43,700 $270,900 $239,200 Additional data (ignoring taxes): 1. Net income for the year was $43,000. 2. Cash dividends declared and paid during the year were $21,400. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $24,700 were sold during the year for $28,400. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. Waterway’s 2020 income statement follows (ignoring taxes). Sales revenue $540,400 Less: Cost of goods sold 381,000 Gross margin 159,400 Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts) 119,300 Income from operations 40,100 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800 ) 2,900 Net income $43,000 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities $ (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) WATERWAY INC. Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to
Comparative balance sheet accounts of Waterway Inc. are presented below. WATERWAY INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,900 Accounts Receivable 70,600 60,300 Inventory 30,100 24,100 Equity investments 22,000 38,900 Machinery 30,300 18,700 Buildings 67,900 55,700 Land 7,600 7,600 $270,900 $239,200 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500 Accumulated Depreciation—Machinery 5,600 2,200 Accumulated Depreciation—Buildings 13,500 8,900 Accounts Payable 34,700 24,500 Accrued Payables 3,500 2,600 Long-Term Notes Payable 21,000 30,800 Common Stock, no-par 150,000 125,000 Retained Earnings 40,300 43,700 $270,900 $239,200 Additional data (ignoring taxes): 1. Net income for the year was $43,000. 2. Cash dividends declared and paid during the year were $21,400. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $24,700 were sold during the year for $28,400. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. Waterway’s 2020 income statement follows (ignoring taxes). Sales revenue $540,400 Less: Cost of goods sold 381,000 Gross margin 159,400 Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts) 119,300 Income from operations 40,100 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800 ) 2,900 Net income $43,000 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities $ (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) WATERWAY INC. Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter1: Accounting As A Form Of Communication
Section: Chapter Questions
Problem 1.14E
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Question
Comparative balance sheet accounts of Waterway Inc. are presented below.
WATERWAY INC.
COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 |
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December 31
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Debit Accounts |
2020
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2019
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Cash |
$42,400
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$33,900
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Accounts Receivable |
70,600
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60,300
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Inventory |
30,100
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24,100
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Equity investments |
22,000
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38,900
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Machinery |
30,300
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18,700
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Buildings |
67,900
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55,700
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Land |
7,600
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7,600
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$270,900
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$239,200
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Credit Accounts | ||||
Allowance for Doubtful Accounts |
$2,300
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$1,500
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5,600
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2,200
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Accumulated Depreciation—Buildings |
13,500
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8,900
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Accounts Payable |
34,700
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24,500
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Accrued Payables |
3,500
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2,600
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Long-Term Notes Payable |
21,000
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30,800
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Common Stock, no-par |
150,000
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125,000
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Retained Earnings |
40,300
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43,700
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$270,900
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$239,200
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Additional data (ignoring taxes):
1. | Net income for the year was $43,000. | |
2. | Cash dividends declared and paid during the year were $21,400. | |
3. | A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. | |
4. | Equity investments (level of ownership is less than 20%) that cost $24,700 were sold during the year for $28,400. No unrealized gains and losses were recorded on these investments in 2020. | |
5. | Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. |
Waterway’s 2020 income statement follows (ignoring taxes).
Sales revenue |
$540,400
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Less: Cost of goods sold |
381,000
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Gross margin |
159,400
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Less: Operating expenses (includes $8,750 depreciation and $5,042 |
119,300
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Income from operations |
40,100
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Other: Gain on sale of investments |
$3,700
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Loss on sale of machinery |
(800
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)
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2,900
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Net income |
$43,000
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(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Net cash flow from operating activities |
$
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(b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
WATERWAY INC.
Statement of Cash Flows (Indirect Method) |
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$
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Adjustments to reconcile net income to | ||
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$
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