Question

XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

Current Year Previous Year
Balance Sheet at December 31
Cash $ 33,300 $ 28,250
Accounts Receivable 34,000 27,500
Inventory 40,000 37,500
Equipment 113,500 95,000
Accumulated Depreciation—Equipment (29,000) (24,500)
Total Assets $ 191,800 $ 163,750
Accounts Payable $ 35,000 $ 26,500
Salaries and Wages Payable 1,500 1,650
Note Payable (long-term) 33,500 39,000
Common Stock 85,600 72,100
Retained Earnings 36,200 24,500
Total Liabilities and Stockholders’ Equity 191,800 163,750
Income Statement
Sales Revenue 115,000
Cost of Goods Sold 67,500
Other Expenses 35,800
Net Income 11,700
Additional Data:
Bought equipment for cash, $18,500.
Paid $5,500 on the long-term note payable.
Issued new shares of stock for $13,500 cash.
No dividends were declared or paid.
Other expenses included depreciation, $4,500; salaries and wages, $19,500; taxes, $5,500; utilities, $6,300.
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 current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
XS SUPPLY COMPANY
Statement of Cash Flows
For the Year Ended December 31
Cash Flows from Operating Activities:
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Cash Flows from Investing Activities:
Cash Flows from Financing Activities:

Answer 1

XS Supply Company

XS Supply Company

Statement of Cash Flows

For the current year ended December 31

Cash Flows from Operating Activities:

Net Income $11,700

Non-cash expenses: Depreciation 4,500

Changes in working capital:

Accounts Receivable -6,500

Inventory -2,500

Accounts Payable 8,500

Salaries and Wages Payable -150

Net cash from operations $15,550

Investing activities:

Purchase of Equipment -$18,500

Financing activities:

Note payable repaid -$5,500

Issue of common stock 13,500

Net cash from financing $8,000

Net cash flows $5,050

Reconciliation:

Cash in hand, beginning $ 28,250

Net cash flows 5,050

Ending balance $ 33,300

Step-by-step explanation:

a) Data and Calculations:

Current Previous

Balance Sheet at December 31 Year Year Changes

Cash $ 33,300 $ 28,250 +$5,050

Accounts Receivable 34,000 27,500 +6,500

Inventory 40,000 37,500 +2,500

Equipment 113,500 95,000 +18,500

Acc. Depreciation—Equipment (29,000) (24,500) (4,500)

Total Assets $ 191,800 $ 163,750

Accounts Payable $ 35,000 $ 26,500 +$8,500

Salaries and Wages Payable 1,500 1,650 -150

Note Payable (long-term) 33,500 39,000 -5,500

Common Stock 85,600 72,100 +13,500

Retained Earnings 36,200 24,500 +11,700

Total Liabilities and Stockholders’ Equity 191,800 163,750

Income Statement

Sales Revenue 115,000

Cost of Goods Sold 67,500

Other Expenses 35,800

Net Income 11,700

Additional data:

Purchase of Equipment $18,500

Note payable repaid $5,500

Issue of common stock $13,500

Depreciation $4,500