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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $10,280. 2. Paid $69,080 to reduce a long-term note payable. 3. Equipment costing $99,000, with accumulated depreciation of $57,000, is sold for cash. 4. Equipment costing $214,680 is purchased by paying cash of $54,800 and signing a long-term note payable for the balance. 5. Borrowed $8,400 by signing a short-term note payable. 6. Issued 10,080 common shares for cash at $10 per share. 7. Declared and paid cash dividends of $137,960. Other information: a. All sales are credit sales. b. All credits to accounts receivable in the period are receipts from customers. c. Purchases of merchandise are on credit. d. All debits to accounts payable in the period result from payments for merchandise. e. The only decrease in income taxes payable is for payment of taxes. f. The other expenses are paid in advance and are initially debited to Prepaid Expenses. Show Transcribed Text Required: Prepare a statement of cash flows for 2020 using the direct method to report cash inflows and outflows from operating activities. (List any deduction in cash and cash outflows as negative amounts.) ICE DRILLING INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: Cash received from customers Cash paid for merchandise inventory Cash paid for other expenses Cash paid for income taxes Net cash inflow from operating activities Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment Net cash outflow from investing activities Cash flows from financing activities: Cash received from issuing common shares Cash borrowed on current notes payable Cash paid on notes payable Cash paid for dividends Net cash outflow from financing activities Net decrease in cash Cash balance at beginning of 2020 Cash balance at end of 2020 S $ 1,075,960 $ (25,960) 100,800 (69,080) (137,960) $ 1,050,000 $ $ 0 (106,240) 943,760 943,760
Transcribed Image Text:Additional information regarding ICE Drilling's activities during 2020: 1. Loss on sale of equipment is $10,280. 2. Paid $69,080 to reduce a long-term note payable. 3. Equipment costing $99,000, with accumulated depreciation of $57,000, is sold for cash. 4. Equipment costing $214,680 is purchased by paying cash of $54,800 and signing a long-term note payable for the balance. 5. Borrowed $8,400 by signing a short-term note payable. 6. Issued 10,080 common shares for cash at $10 per share. 7. Declared and paid cash dividends of $137,960. Other information: a. All sales are credit sales. b. All credits to accounts receivable in the period are receipts from customers. c. Purchases of merchandise are on credit. d. All debits to accounts payable in the period result from payments for merchandise. e. The only decrease in income taxes payable is for payment of taxes. f. The other expenses are paid in advance and are initially debited to Prepaid Expenses. Show Transcribed Text Required: Prepare a statement of cash flows for 2020 using the direct method to report cash inflows and outflows from operating activities. (List any deduction in cash and cash outflows as negative amounts.) ICE DRILLING INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: Cash received from customers Cash paid for merchandise inventory Cash paid for other expenses Cash paid for income taxes Net cash inflow from operating activities Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment Net cash outflow from investing activities Cash flows from financing activities: Cash received from issuing common shares Cash borrowed on current notes payable Cash paid on notes payable Cash paid for dividends Net cash outflow from financing activities Net decrease in cash Cash balance at beginning of 2020 Cash balance at end of 2020 S $ 1,075,960 $ (25,960) 100,800 (69,080) (137,960) $ 1,050,000 $ $ 0 (106,240) 943,760 943,760
ICE Drilling Inc.'s balance sheet information and income statement are as follows: ICE Drilling Inc. Income Statement For Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense Other expenses Total operating expenses Profit from operations Loss on sale of equipment Profit before taxes Income taxes Profit ICE Drilling Inc. Comparative Balance Sheet Information Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accumulated depreciation Accounts payable Current notes payable. $ 36,000 304,560 Notes payable Common shares Retained earnings $1,110,400 554,000 $ 556,400 340,560 215,840 10,280 $ 205,560 25,960 $ 179,600 December 31 210,000 444,800 284,640 2020 2019 $ 105,680 $ 165,640 139,600 105,160 607, 200 11,980 356,080 71,560 193,140 16,400 559, 600 14,000 240,400 92,560 278,040 8,000 119, 200 344,000 243,000
Transcribed Image Text:ICE Drilling Inc.'s balance sheet information and income statement are as follows: ICE Drilling Inc. Income Statement For Year Ended December 31, 2020 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense Other expenses Total operating expenses Profit from operations Loss on sale of equipment Profit before taxes Income taxes Profit ICE Drilling Inc. Comparative Balance Sheet Information Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accumulated depreciation Accounts payable Current notes payable. $ 36,000 304,560 Notes payable Common shares Retained earnings $1,110,400 554,000 $ 556,400 340,560 215,840 10,280 $ 205,560 25,960 $ 179,600 December 31 210,000 444,800 284,640 2020 2019 $ 105,680 $ 165,640 139,600 105,160 607, 200 11,980 356,080 71,560 193,140 16,400 559, 600 14,000 240,400 92,560 278,040 8,000 119, 200 344,000 243,000
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