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E14A-9 Best Corporation

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E14A-9 Preparing the statement of cash flows—direct method [20–30 min]
The income statement and additional data of Best Corporation follow:

Income Statement
Year Ended June 30, 2012
Sales revenue $231,000
Dividend revenue 8,000 $239,000
Cost of goods sold $102,000
Salary expense 48,000
Depreciation expense 28,000
Advertising expense 13,000
Income tax expense 11,000
Interest expense 3,000 $205,000
Net income $34,000

Additional data follow:
Collections from customers are $15,500 more than sales.
Dividend revenue, interest expense, and income tax expense equal their cash amounts.
Payments to suppliers are the sum of cost of goods sold plus advertising expense.
Payments to employees are $1,000 more than salary expense.
Acquisition of plant assets is $102,000.
Cash receipts from sale of land total $24,000.
Cash receipts from issuance of common stock total $32,000.
Payment of long-term note payable is $17,000.
Payment of dividends is $10,500.
Cash balance, June 30, 2011, was $25,000; June 30, 2012 was $28,000.

1. Prepare Best Corporation’s statement of cash flows for the year ended June 30,
2012. Use the direct method

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