P12-5 xs supply company is developing its annual financial statements

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:

 

2014                2013  

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)

                                                            $201,000         $170,000

     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

 

Additional Data:

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.

 

Required:

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:        –

 

                                                                        $          –

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