Using this information, complete the Statement of Cash Flows:

- Land was sold for $25,000 in cash
- Furniture was purchased for $20,000 in cash
- Goodwill was purchased for $66,000 in cash
- The compnay sold stock for $227,000 in cash
- Company stock was purchased for $20,000 in
cash
- The company paid $4,000 in cash dividends

Unadjusted Trial Balance:

Account Title: Debit Credit

Cash 23,400

Inventory 60,000

Accounts Receivable 22,000

Office Supplies 5,000

Prepaid Insurance 3,000

Furniture 20,000

Land 24,000

Goodwill 40,000

Accounts Payable 19,900

Utilities Payable 600

Unearned Revenue 38,000

Common Stock 100,000

Dividends 4,000

Service Revenue 76,900

Cost of Goods Sold 25,000

Salaries Expense 6,000

Rent Expense 2,000

Utilities Expense 1,000

Total: 235,400 235,400

Adjusting Entries:

1. An inventory of supplies showed $3,000 were used up.
2. The furniture was purchased for $30,000. It has $0 salvage value and a 5 year
useful life. One year of depreciation must be recorded.
3. $3,000 of insurance was purchased for 12 months. $1,500 of insurance was used.
4. Performed $20,000 of services that was paid for in advance
5. On last day of the month, performed $9,100 of services for new customer and
will be paid next month
6. Happy cleaners provided $9,000 of cleaning services on the last day of the
month. This waas a special yearly clean. They will be paid next month.
7. An inventory count revealed there was $4,000 of inventory shrinkage. This was a
larger than usual amount of shrinkage.
8. The company estimates bad debt expense to be 1% of credit sales. Assume all
sales are made on credit.
9. A company with net assets of $100,000 was purchased for $190,000 one year
ago. The current fair value of the company is 180,000. Perform a goodwill
impairment test and record an impairment entry if one is needed.
10. The company had a calculated warranty expense of 19,000 on oustanding sales
11. The company sold an additional 10,000 shares at a market price of $15. The par
value of the stock is $1.
12. The company purchased 1,000 of its own shares at a market price of $20.

Transcribed Image Text:Statement of Cash Flows Cash Flow from Operating Activities: Net Income (Loss) Adjustments to reconcile net income to cash: Provided by Operating Activities Depreciation expense Impariment loss Loss on disposal of long term assets Gain on disposal of long term assets Increase in accounts receivable Increase in inventory Increase in supplies Increase in prepaid insurance Increase in accounts payable Increase in utilities payable Increase in unearned revenue Increase in Allowance for warranty expense Net Cash Provided by Opearting Activites Cash Flow from Investing Activities: Cash receipt for sale of land Cash payment for acquisition furniture Cash payment for acquisiton Goodwill Net Cash Provided (Used) by Investing Activites Cash Flow from Financing Activities: Cash payment from purchase of common stock Cash receipt for sale of common stock cash payment of dividends Net Cash Provided (Used) by Financing Activites Net Increase (Decrease) in Cash Beginning Cash Balance Ending Cash Balance ——————
Transcribed Image Text:ANN SIMPSON DESIGNER Income Statement Year Ended December 31, 2018 Revenues: Sales or Service Revenue Expenses: Cost of goods sold Utilities Expense Rent Expense TOLE Cleaning expense ON Salary Expense Supplies Expense akkoom Depreciation Expense- Furniture Depreciation LAD Insurance expense Bad debt expense Impairment loss Warranty Expense Total Expenses Net Income Beainnina. January 1. 2018 Net income for the year Dividends Ending Balance, December 31, 2018 Current Assets: Cash Inventory Net Accounts Receivable Office Supplies Prepaid Insurance Total Current Assets Property. Plant. and Equipment: Land Furniture Less: Accumulated Depreciation-Furniture Total Property. Plant. and Equipment Intangible Assets: Goodwill Total Assets Liabilities Current Liabilities: Accounts Pavable Utilities Pavable Unearned Revenue Allowance for Warranty Expense Total Current Liabilities Total Liabilities Common Stock Additional Paid in Capital - Common Stock Owner's Equity Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity Page ANN SIMPSON DESIGNER Statement of Owner's Eauitv Year Ended December 31, 2018 ANN SIMPSON DESIGNER Balance Sheet December 31, 2018 Assets Stockholders' Equitv $ 20.000 (6.000) 29,000 1,000 2,000 9,000 6,000 3,000 6,000 1,500 1,060 10,000 19,000 $153,400 $56,000 $30,040 $2,000 $1,500 24,000 14,000 30,000 2 $28,900 $600 $18,000 $19,000 110,000 $140,000 14,440 ($20,000) $106,000 87,560 $18,440 $0 18,440 18,440 (4,000) 14,440 $242,940 38,000 $310,940 $66,500 66,500 244,440 310,940

Question

Using this information, complete the Statement of Cash Flows:

- Land was sold for $25,000 in cash
- Furniture was purchased for $20,000 in cash
- Goodwill was purchased for $66,000 in cash
- The compnay sold stock for $227,000 in cash
- Company stock was purchased for $20,000 in
cash
- The company paid $4,000 in cash dividends

Unadjusted Trial Balance:

Account Title:	Debit	Credit
Cash	23,400
Inventory	60,000
Accounts Receivable	22,000
Office Supplies	5,000
Prepaid Insurance	3,000
Furniture	20,000
Land	24,000
Goodwill	40,000
Accounts Payable		19,900

Utilities Payable		600
Unearned Revenue		38,000
Common Stock		100,000
Dividends	4,000
Service Revenue		76,900
Cost of Goods Sold	25,000
Salaries Expense	6,000
Rent Expense	2,000
Utilities Expense	1,000
Total:	235,400	235,400

Adjusting Entries:

1. An inventory of supplies showed $3,000 were used up.
2. The furniture was purchased for $30,000. It has $0 salvage value and a 5 year
useful life. One year of depreciation must be recorded.
3. $3,000 of insurance was purchased for 12 months. $1,500 of insurance was used.
4. Performed $20,000 of services that was paid for in advance
5. On last day of the month, performed $9,100 of services for new customer and
will be paid next month
6. Happy cleaners provided $9,000 of cleaning services on the last day of the
month. This waas a special yearly clean. They will be paid next month.
7. An inventory count revealed there was $4,000 of inventory shrinkage. This was a
larger than usual amount of shrinkage.
8. The company estimates bad debt expense to be 1% of credit sales. Assume all
sales are made on credit.
9. A company with net assets of $100,000 was purchased for $190,000 one year
ago. The current fair value of the company is 180,000. Perform a goodwill
impairment test and record an impairment entry if one is needed.
10. The company had a calculated warranty expense of 19,000 on oustanding sales
11. The company sold an additional 10,000 shares at a market price of $15. The par
value of the stock is $1.
12. The company purchased 1,000 of its own shares at a market price of $20.

Statement of Cash Flows
Cash Flow from Operating Activities:
Net Income (Loss)
Adjustments to reconcile net income to cash:
Provided by Operating Activities
Depreciation expense
Impariment loss
Loss on disposal of long term assets
Gain on disposal of long term assets
Increase in accounts receivable
Increase in inventory
Increase in supplies
Increase in prepaid insurance
Increase in accounts payable
Increase in utilities payable
Increase in unearned revenue
Increase in Allowance for warranty expense
Net Cash Provided by Opearting Activites
Cash Flow from Investing Activities:
Cash receipt for sale of land
Cash payment for acquisition furniture
Cash payment for acquisiton Goodwill
Net Cash Provided (Used) by Investing Activites
Cash Flow from Financing Activities:
Cash payment from purchase of common stock
Cash receipt for sale of common stock
cash payment of dividends
Net Cash Provided (Used) by Financing Activites
Net Increase (Decrease) in Cash
Beginning Cash Balance
Ending Cash Balance
——————

ANN SIMPSON DESIGNER
Income Statement
Year Ended December 31, 2018
Revenues:
Sales or Service Revenue
Expenses:
Cost of goods sold
Utilities Expense
Rent Expense
TOLE
Cleaning expense
ON
Salary Expense
Supplies Expense
akkoom
Depreciation Expense- Furniture
Depreciation LAD
Insurance expense
Bad debt expense
Impairment loss
Warranty Expense
Total Expenses
Net Income
Beainnina. January 1. 2018
Net income for the year
Dividends
Ending Balance, December 31, 2018
Current Assets:
Cash
Inventory
Net Accounts Receivable
Office Supplies
Prepaid Insurance
Total Current Assets
Property. Plant. and Equipment:
Land
Furniture
Less: Accumulated Depreciation-Furniture
Total Property. Plant. and Equipment
Intangible Assets:
Goodwill
Total Assets
Liabilities
Current Liabilities:
Accounts Pavable
Utilities Pavable
Unearned Revenue
Allowance for Warranty Expense
Total Current Liabilities
Total Liabilities
Common Stock
Additional Paid in Capital - Common Stock
Owner's Equity
Treasury Stock
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
Page
ANN SIMPSON DESIGNER
Statement of Owner's Eauitv
Year Ended December 31, 2018
ANN SIMPSON DESIGNER
Balance Sheet
December 31, 2018
Assets
Stockholders' Equitv
$ 20.000
(6.000)
29,000
1,000
2,000
9,000
6,000
3,000
6,000
1,500
1,060
10,000
19,000
$153,400
$56,000
$30,040
$2,000
$1,500
24,000
14,000
30,000
2
$28,900
$600
$18,000
$19,000
110,000
$140,000
14,440
($20,000)
$106,000
87,560
$18,440
$0
18,440
18,440
(4,000)
14,440
$242,940
38,000
$310,940
$66,500
66,500
244,440
310,940

Accepted Answer

The cash flow statement assesses a corporation's ability to handle its cash balance, or how…