Question - Travis Engineering presented the following comparative balance sheet:
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TRAVIS ENGINEERING Balance Sheet December 31, 20X2 and 20X3
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Assets
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20X3
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20X2
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Cash
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$672,200
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$145,300
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Accounts receivable
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219,600
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175,600
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Inventories
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234,500
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316,900
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Land
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1,300,000
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300,000
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Building and equipment
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900,000
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856,000
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Less: Accumulated depreciation
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(501,800)
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(435,000)
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Total assets
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$2,824,500
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$1,358,800
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Liabilities
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Accounts payable
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$111,100
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$93,400
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Utilities payable
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2,500
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4,000
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Interest payable
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5,000
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-
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Long-term note payable
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1,000,000
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-
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Stockholders' equity
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|
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Common stock, $1 par
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300,000
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250,000
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Paid in capital in excess of par
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560,000
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450,000
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Retained earnings
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845,900
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561,400
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Total liabilities and equity
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$2,824,500
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$1,358,800
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Additional information about transactions and events occurring in 20X3 is as follows:
- Dividends of $105,700 were declared and paid.
- Accounts payable and accounts receivable relate solely to purchases and sales of inventory.
- The increase in land resulted from the purchase of land via issuance of the long-term note payable. No buildings were purchased or sold. Equipment was purchased.
- In January of 20X3, equipment with an original cost of $75,000 was sold for $50,000.
- The increase in paid-in capital all resulted from issuing additional shares for cash.
The income statement for the year ending 20X3 follows:
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TRAVIS ENGINEERING Income Statement For the Year Ending December 31, 20X3
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Sales
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$2,856,000
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Cost of goods sold
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1,576,300
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Gross profit
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$1,279,700
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Operating expenses and other
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Salaries
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$433,500
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Utilities
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64,200
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Interest
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60,000
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Depreciation
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76,800
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Loss on sale of equipment
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15,000
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649,500
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Income before income tax
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630,200
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Income tax
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240,000
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Net income
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$390,200
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Prepare Travis Engineering's statement of cash flows for the year ending 20X3. Use the direct approach, and prepare the supplemental reconciliation of net income to operating cash flows.