Net sales Expenses: Cost of goods sold Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense Total expenses Net income $ 1,550,000 778,000 19,000 $ 2,576,000 7,200 11,000 40,000 2,405,200 $ 170,800 CLOUD MANGU Balance Sheets December 31 2024 2023 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable $ 152,320 72,200 105,000 $ 77,560 52,000 127,000 4,440 8,880 97,000 202,000 224,000 254,000 202,000 (59,400) $ 832,000 (40,400) $ 646,600 $ 58,800 5,200 $ 73,000 8,400 Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock 14,200 13,200 269,000 217,000 220,000 220,000 Retained earnings 264,800 115,000 Total liabilities and stockholders' equity $ 832,000 $ 646,600 Additional Information for 2024: 1. Purchased investment in bonds for $97,000. 2. Sold land for $14,800. The land originally was purchased for $22,000, resulting in a $7,200 loss being recorded at the time of the sale. 3. Purchased $52,000 in equipment by issuing a $52,000 long-term note payable to the seller. No cash was exchanged in the transaction. 4. Declared and paid a cash dividend of $21,000. Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. Note: Amounts to be deducted, cash outflows, and any decrease in cash should be indicated with a minus sign. Cash Flows from Operating Activities: CLOUD MANGU Statement of Cash Flows For the Year Ended December 31, 2024 Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities Cash Flows from Investing Activities: Net cash flows from investing activities Cash Flows from Financing Activities: Net cash flows from financing activities Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities

Net sales Expenses: Cost of goods sold Operating expenses Depreciation expense Loss on sale of land Interest expense Income tax expense Total expenses Net income $ 1,550,000 778,000 19,000 $ 2,576,000 7,200 11,000 40,000 2,405,200 $ 170,800 CLOUD MANGU Balance Sheets December 31 2024 2023 Assets Current assets: Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investments Land Equipment Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable $ 152,320 72,200 105,000 $ 77,560 52,000 127,000 4,440 8,880 97,000 202,000 224,000 254,000 202,000 (59,400) $ 832,000 (40,400) $ 646,600 $ 58,800 5,200 $ 73,000 8,400 Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock 14,200 13,200 269,000 217,000 220,000 220,000 Retained earnings 264,800 115,000 Total liabilities and stockholders' equity $ 832,000 $ 646,600 Additional Information for 2024: 1. Purchased investment in bonds for $97,000. 2. Sold land for $14,800. The land originally was purchased for $22,000, resulting in a $7,200 loss being recorded at the time of the sale. 3. Purchased $52,000 in equipment by issuing a $52,000 long-term note payable to the seller. No cash was exchanged in the transaction. 4. Declared and paid a cash dividend of $21,000. Required: Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. Note: Amounts to be deducted, cash outflows, and any decrease in cash should be indicated with a minus sign. Cash Flows from Operating Activities: CLOUD MANGU Statement of Cash Flows For the Year Ended December 31, 2024 Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities Cash Flows from Investing Activities: Net cash flows from investing activities Cash Flows from Financing Activities: Net cash flows from financing activities Cash at the beginning of the period Cash at the end of the period Note: Noncash Activities

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

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.10E

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