P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) LO12-2, 12-4, 12-6
CF Unit6 P12-5 XS Supply Company
XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:
Balance sheet at December 31
Cash $34,000 $29,000
Accounts receivable 35,000 28,000
Merchandise inventory 41,000 38,000
Property and equipment 121,000 100,000
Less: Accumulated depreciation (30,000) (25,000)
Accounts payable $36,000 $ 27,000
Wages payable 1,200 1,400
Note payable, long-term 38,000 44,000
Contributed capital 88,600 72,600
Retained earnings 37,200 25,000
$ 201,000 $ 170,000
Income statement for 2014
Sales $ 120,000
Gain on sale of equipment 1,000
Cost of goods sold 70,000
Other expenses 38,800
Net income $ 12,200
a. Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash.
b. Paid $6,000 on the long-term note payable.
c. Issued new shares of stock for $16,000 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800.
f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.
1 Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method.
(List cash outflows as negative amounts.)
Possible input areas are shaded.
XS SUPPLY COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Net cash provided by operating activities –
Cash flows from investing activities:
Cash flows from financing activities: –