Under the indirect

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Unformatted text preview: nded December 31, 2012 Beginning retained earnings balance: January 1, 2012 Plus: Net income Less: Dividends Ending retained earnings balance: December 31, 2012 $ 0 7,400 (3,000) $ 4,400 ISS, Inc. Balance Sheet December 31, 2012 Assets Cash Liabilities & Stockholders' Equity 25,000 Accounts payable $ $ 10,000 Accounts receivable 23,200Accrued interest payable 1,000 Inventory 11,200 Dividend payable 3,000 Prepaid rent 4,000 Long­term note payable 10,000 Furniture 30,000 Common stock (5,000) Retained earnings 60,000 Accumulated depreciation 4,400 Total liabilities and Total assets $ 88,400 stockholders' equity 88,400 ISS, Inc. Statement of Cash Flows – Indirect Method For the Year Ended December 31, 2012 Cash flows from operating activities: Net income $ Adjustments: Depreciation $ 5,000 Increase in accounts receivable Increase in inventory Increase in prepaid rent Increase in accounts payable Increase in accrued interest payable Total adjustments Net cash increase (decrease) due to operating activities $ (15,000) Cash flows from investing activities: Purchase of furniture $ (20,000) Net cash increase (decrease) due to 7,400 (23,200) (11,200) (4,000) 10,000 1,000 (22,400) $ investing activities (20,000) Cash flows from financing activities: Proceeds from issuance of common stock $ 60,000 Net increase (decrease) due to financing activities 60,000 Net increase (decrease) in cash $ 25,000 Beginning cash balance, January 1, 2012 0 Ending cash balance, December 31, 2012 $ 25,000 P14–14 Concluded c. Working capital Current ratio d. Working capital Current ratio = Current assets – Current liabilities = ($25,000 + $23,200 + $11,200 + $4,000) – ($10,000 + $1,000 + $3,000) = $63,400 – $14,000 = $49,400 = Current assets ÷ Current liabilities = $63,400 ÷ $14,000 = 4.53 = ($63,400 – $10,000 cash) – ($14,000 – $10,000 accounts payable) = $53,400 – $4,000 = $49,400 = $53,400 ÷ $4,000 = 13.35 Net cash flow used by operating activities = ($15,000) from part (b) + ($10,000) = ($25,000) P14–15 a. Marketing revenue 2012 Ending accounts receivable = 2012 Beginning accounts receivable + 2012 cash $150,000 Cash collections Marketing revenue – Cash collections during 2012 = $105,000 + $1,000,000 – Cash collections = $955,000 Sal...
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This homework help was uploaded on 03/03/2014 for the course ACCT 5053 taught by Professor Staff during the Fall '08 term at Oklahoma State.

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