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P23-8.
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(SCF—Direct and Indirect Methods)
Comparative balance sheet accounts of Sharpe Company are presented below.
Additional data:
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![https://edugen.wileyplus.com/edugen/courses/crs7181/common/art/pixel.gif]()
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1.
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Equipment that cost $10,000 and was 60% depreciated was sold in 2014.
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![https://edugen.wileyplus.com/edugen/courses/crs7181/common/art/pixel.gif]()
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2.
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Cash dividends were declared and paid during the year.
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![https://edugen.wileyplus.com/edugen/courses/crs7181/common/art/pixel.gif]()
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3.
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Common stock was issued in exchange for land.
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![https://edugen.wileyplus.com/edugen/courses/crs7181/common/art/pixel.gif]()
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4.
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Investments that cost $35,000 were sold during the year.
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![https://edugen.wileyplus.com/edugen/courses/crs7181/common/art/pixel.gif]()
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5.
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There were no write-offs of uncollectible accounts during the year.
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Sharpe's 2014 income statement is as follows.
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Sales revenue
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$950,000
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Less: Cost of goods sold
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600,000
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Gross profit
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350,000
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Less: Operating expenses (includes depreciation expense and bad debt expense)
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250,000
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Income from operations
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100,000
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Other revenues and expenses
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Gain on sale of investments
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$15,000
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Loss on sale of equipment
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(3,000)
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12,000
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Income before taxes
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112,000
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Income taxes
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45,000
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Net income
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$ 67,000
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Instructions
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(a)
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Compute net cash provided by operating activities under the direct method.
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(b)
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Prepare a statement of cash flows using the indirect method.
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mgsr9m
23-8_week_5.docx
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