Question - The financial statements of Resolute Inc. are presented here:
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RESOLUTE INC. Statement of Financial Position December 31
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Assets
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2015
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2014
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Cash
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$12,810
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$5,100
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Accounts receivable
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38,300
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23,800
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Merchandise inventory
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27,730
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20,350
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Property, plant, and equipment
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79,000
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75,640
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Accumulated depreciation
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(29,920)
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(24,890)
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Goodwill
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5,480
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15,360
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Total assets
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$133,400
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$115,360
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Liabilities and Shareholders' Equity
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Accounts payable
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$17,650
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$15,530
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Salaries payable
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1,910
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2,140
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Income tax payable
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1,170
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4,170
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Bank loan payable
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32,830
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46,560
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Common shares
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18,170
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14,570
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Retained earnings
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56,920
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27,640
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Accumulated other comprehensive income
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4,750
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4,750
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Total liabilities and shareholders' equity
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$133,400
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$115,360
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RESOLUTE INC. Income Statement Year Ended December 31, 2015
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Sales
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$254,990
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Cost of goods sold
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140,430
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Gross profit
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114,560
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Operating expenses
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77,940
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Profit from operations
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36,620
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Interest expense
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4,030
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Profit before income tax
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32,590
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Income tax expense
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3,310
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Profit
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$29,280
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Additional information:
1. Equipment was sold during the year for $8,460 cash. The equipment originally cost $11,910 and had a carrying amount of $8,460 at the time of sale.
2. Equipment costing $15,270 was purchased in exchange for $4,380 cash and a $10,890 long-term bank loan.
3. Accounts payable relate to merchandise creditors.
4. Some of the bank loan was repaid during the year.
5. Operating expenses are composed of $8,480 of depreciation expense, $7,840 of administrative expenses, $51,740 of salaries expense, and an $9,880 impairment loss on goodwill.
Required - Prepare the statement of cash flows using the direct method.