Travis Dorso- Unit 6 Assignment - Exercise 12-15 Income...

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Exercise 12-15 Income Statement, Statement of Cash Flows(Direct Method) 1)-Income Statement For First Year Grooming service revenue $150,000.00 Expenses Operating expenses $58,000.00 ($80,000 - $10,000 - $12,000 = $58,000) Amortization, patent $10,000.00 ($100,000/10 years = $10,000) Rent, storage building $12,000.00 $80,000.00 Net income $70,000.00 2)- Statement of Cash Flows for First Year Using Direct Method Cash Flows from Operating Activities Cash receipts from: Cash sales $110,000.00 ($150,000 - $40,000 = $110,000) Sales on account $30,000.00 ($40,000 - $10,000 = $30,000) Total cash receipts $140,000.00 Cash payments for: Operating expenses ($58,000.00) Rent, storage building ($12,000.00) Security deposit ($2,000.00) Total cash payments ($72,000.00) Net cash flows from operating activities $68,000.00 Cash Flows from Investing Activities Cash outflows for: Down payment on patent ($20,000.00) ($100,000 x 20% = $20,000) Cash Flows from Financing Activities Cash inflows from: Issuance of common stock $50,000.00 Cash outflows for: Payment of cash dividends ($20,000.00) Net cash flows from financing activities $30,000.00 Net increase in cash $78,000.00 Cash balance, beginning of year $0.00 Cash balance, end of year $78,000.00 Supplemental schedule of noncash investing and financing activities Acquisition of patent in exchange for note payable $80,000.00 3)- Company Generate more or less 4)- Balance Sheet As of End of Year Handsome Hounds Grooming Company Balance Sheet Assets Current assets Cash $78,000.00 Accounts receivable $10,000.00 Security deposit $2,000.00 Total current assets $90,000.00 Long-term assets
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