Prepare a statement of cash flow

ACG 2071 Managerial Accounting

Reporting Cash Flows

Minicase

CASH FLOWS PROBLEM:

Kite Corporation, a merchandiser, recently completed its calendar-year 2011 operations. For the year,

(1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers,

(3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for

inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The

company's balance sheets and income statement follow. Prepare a statement of cash flows in good

form.

Joseph Corporation Comparative Balance Sheet December 31, 2011 and 2010

Assets

Cash $ 136,500.00 $ 71,550.00

Accounts Receivable $ 74,100.00 $ 90,750.00

Merchandise Inventory $ 454,500.00 $ 490,200.00

Prepaid Expenses $ 17,100.00 $ 19,200.00

Equipment $ 278,250.00 $ 216,000.00

Accumulated Depreciation $ (108,750.00) $ (93,000.00)

Total Assets $ 851,700.00 $ 794,700.00

Liabilities and Equity

Accounts Payable $ 117,450.00 $ 123,450.00

Short-term Notes Payable $ 17,250.00 $ 11,250.00

Long-term Notes Payable $ 112,500.00 $ 82,500.00

Common Stock, $5 par $ 465,000.00 $ 450,000.00

Paid in Capital in excess $ 18,000.00 Retained Earnings $ 121,500.00 $ 127,500.00

Total Liabilities & Equity $ 851,700.00 $ 794,700.00

ACG 2071 Managerial Accounting

Reporting Cash Flows

Minicase

Joseph Corporation Income Statement December 31, 2011

Sales

$ 1,083,000.00

Cost of goods sold

$ 585,000.00

Gross profit

$ 498,000.00

Operating Expenses Depreciation expense $ 36,600.00

Rent Expense $ 150,000.00 Salaries Expense $ 175,000.00 Other Expenses $ 67,850.00

$ 429,450.00

$ 68,550.00

Other gains and losses Loss on sale of equipment

$ 2,100.00

$ 66,450.00

Income tax expense

$ 9,450.00

Net Income

$ 57,000.00

Additional Information on Year 2011 Transactions

a. The loss on the cash sale of equipment was $2,100 (details in b). b. Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash. c. Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note

payable for the balance d. Borrowed $6,000 cash by signing a short-term note payable. e. Paid $45,000 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $11 cash per share. g. Declared and paid cash dividends of $63,000.