The comparative balance sheet of Orange Angel Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: 1 Dec. 31, 20Y8 Dec. 31, 20Y7 2 Assets 3 Cash $151,000.00 $190,000.00 4 Accounts receivable (net) 522,000.00 569,000.00 5 Merchandise inventory 968,000.00 759,000.00 6 Prepaid expenses 28,000.00 19,000.00 7 Equipment 2,032,000.00 1,424,000.00 8 Accumulated depreciation-equipment (380,000.00) (304,000.00) 9 Total assets $3,321,000.00 $2,657,000.00 10 Liabilities and Stockholders’ Equity 11 Accounts payable (merchandise creditors) $190,000.00 $171,000.00 12 Mortgage note payable 0.00 759,000.00 13 Common stock, $10 par 1,140,000.00 380,000.00 14 Excess of paid-in capital over par 570,000.00 190,000.00 15 Retained earnings 1,421,000.00 1,157,000.00 16 Total liabilities and stockholders’ equity $3,321,000.00 $2,657,000.00 Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows: a. Net income, $359,000. b. Depreciation reported on the income statement, $218,000. c. Equipment was purchased at a cost of $750,000, and fully depreciated equipment costing $142,000 was discarded, with no salvage realized. d. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty. e. 76,000 shares of common stock were issued at $15 for cash. f. Cash dividends declared and paid, $95,000. Required: Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow for each section, if required.

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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Question

The comparative balance sheet of Orange Angel Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$151,000.00	$190,000.00
4	Accounts receivable (net)	522,000.00	569,000.00
5	Merchandise inventory	968,000.00	759,000.00
6	Prepaid expenses	28,000.00	19,000.00
7	Equipment	2,032,000.00	1,424,000.00
8	Accumulated depreciation-equipment	(380,000.00)	(304,000.00)
9	Total assets	$3,321,000.00	$2,657,000.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$190,000.00	$171,000.00
12	Mortgage note payable	0.00	759,000.00
13	Common stock, $10 par	1,140,000.00	380,000.00
14	Excess of paid-in capital over par	570,000.00	190,000.00
15	Retained earnings	1,421,000.00	1,157,000.00
16	Total liabilities and stockholders’ equity	$3,321,000.00	$2,657,000.00

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

a.	Net income, $359,000.
b.	Depreciation reported on the income statement, $218,000.
c.	Equipment was purchased at a cost of $750,000, and fully depreciated equipment costing $142,000 was discarded, with no salvage realized.
d.	The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
e.	76,000 shares of common stock were issued at $15 for cash.
f.	Cash dividends declared and paid, $95,000.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow for each section, if required.

Instructions
Dec. 31, 20Y8
Dec. 31, 20Y7
1.
Assets
3 Cash
$151,000.00
$190,000.00
4 Accounts receivable (net)
522,000.00
569,000.00
5 Merchandise inventory
968,000.00
759,000.00
6 Prepaid expenses
28,000.00
19,000.00
7 Equipment
2,032,000.00
1,424,000.00
8 Accumulated depreciation-equipment
(380,000.00)
(304,000.00)
Total assets
$3,321,000.00
$2,657,000.00
10
Liabilities and Stockholders' Equity
11 Accounts payable (merchandise creditors)
$190,000.00
$171,000.00
12 Mortgage note payable
0.00
759,000.00
13 Common stock, $10 par
1,140,000.00
380,000.00
14 Excess of paid-in capital over par
570,000.00
190,000.00
9,

15 Retained earnings
1,421,000.00
1,157,000.00
Total liabilities and stockholders' equity
$3,321,000.00
$2,657,000.00
16
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:
a. Net income, $359,000.
b. Depreciation reported on the income statement, $218,000.
c. Equipment was purchased at a cost of $750,000, and fully depreciated equipment costing $142,000 was discarded, with no salvage realized.
d. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
e. 76,000 shares of common stock were issued at $15 for cash.
f. Cash dividends declared and paid, $95,000.

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