ACC440- Mesa Manufacturing Corporation_Statement of cash flows

ACC440– External Financial Reporting II
Statement of Cash Flows Assignment 
Summer, 2015 

Shown below are the balance sheets of Mesa Manufacturing Corporation for the years ended December 31, 20X1, and December 31, 20X2, followed by the income statement for the year ended December 31, 20X2: 
 
                                                          20X2                              20X1 
 
Cash                                                 $ 232,500                      $ 195,000 
Accounts Receivable                        485,000                             512,500 
Allowance for Uncollectibles             (52,000)                            (28,000) 
Inventory                                           347,200                             330,000 
Interest Receivable                               6,000                                8,200 
Equity Investment in XTS                 102,000                            100,000 
Held-to-Maturity Investments            125,000                            160,000 
Land                                                  220,000                            140,000 
Equipment                                        850,000                             722,000 
Accumulated Depreciation                (371,000)                          (285,400) 
                                                          $ 1,944,700                   $ 1,854,300 
 
Accounts Payable                             $ 329,000                      $ 292,500 
Salaries Payable                               30,000                           25,000 
Income Taxes Payable                     126,000                         134,300 
Bonds Payable (net)                         540,000                         550,000 
Common Stock (par value 1$)          50,000                           35,000 
Additional Paid-in Capital                 345,000                         290,000 
Retained Earnings                            524,700                         527,500 
                                                          $ 1,944,700                   $ 1,854,300 
 
Income Statement for 20X2: 
 
Revenues and Gains: 
 Sales Revenue                                                             $3,764,600 
 Interest and Dividend Income                                             13,500 
 Income From Equity Investment in XTS                             12,000 
 Gain on Sale of HTM Investments                                     21,000 
 Total Revenues and Gains                                           $3,811,100 
 

Less: 
 Cost of Goods Sold                         $2,339,400 
 Salaries Expense                              623,800 
 Depreciation Expense                     114,200 
 Bad Debt Expense                             45,000 
 Interest Expense                              40,000 
 Loss on Disposal of Equipment       23,900 
 Income Tax Expense                       239,000                3,425,300 
 Net Income                                                                   $ 385,800

 
 
Additional Information: 
 
1. The only equipment disposed of during the year was a damaged machine that had a historic cost Mesa $52,500. 
2. No additional held-to-maturity investments were bought during the year. 
3. No bonds were issued or retired during the year. The change in the account balance was due to the amortization of a bond premium. 
4. Common stock with par of $5,000 and total market value of $25,000, along with $55,000 in cash, was exchanged for land to be used for a future plant site. 
No land was sold during the year. All other issuances of common stock were for cash. 
 
Required: 
Prepare the statement of cash flows for the year ended December 31, 20X2. Use the direct method of computing cash provided by operating activities. A reconciliation of net income to cash provided by operating activities is required.