The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: 1 Dec. 31, 20Y6 Dec. 31, 20Y5
2 Assets
3 Cash $643,400.00 $679,400.00
4 Accounts receivable (net) 566,800.00 547,400.00
5 Inventories 1,011,000.00 982,800.00
6 Investments 0.00 240,000.00
7 Land 520,000.00 0.00
8 Equipment 880,000.00 680,000.00
9 Accumulated depreciation (244,400.00) (200,400.00)
10 Total assets $3,376,800.00 $2,929,200.00
11 Liabilities and Stockholders’ Equity
12 Accounts payable
(merchandise creditors) $771,800.00 $748,400.00
13 Accrued expenses payable
(operating expenses) 63,400.00 70,800.00
14 Dividends payable 8,800.00 6,400.00
15 Common stock, $2 par 56,000.00 32,000.00
16 Paid-in capital: Excess of
issue price over par—common
stock 408,000.00 192,000.00
17 Retained earnings 2,068,800.00 1,879,600.00
18 Total liabilities and
stockholders’ equity $3,376,800.00 $2,929,200.00
The income statement for the year ended December 31, 20Y6, is as follows:
1 Sales $5,980,000.00
2 Cost of merchandise sold 2,452,000.00
3 Gross profit $3,528,000.00
4 Operating expenses:
5 Depreciation expense $44,000.00
6 Other operating expenses 3,100,000.00
7 Total operating expenses 3,144,000.00
8 Operating income $384,000.00
9 Other expense:
10 Loss on sale of investments (64,000.00)
11 Income before income tax $320,000.00
12 Income tax expense 102,800.00
13 Net income $217,200.00
Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $176,000 cash.
d. The common stock was issued for cash.
e. There was a $28,000 debit to Retained Earnings for cash dividends declared.
a. Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.
b. Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.