Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
ABC Music Co.
Income Statement
For the Year Ended June 30, 2016
Net Sales $350,000
Less Expenses
Cost of Goods Sold $200,000
Depreciation Expense 20,000
Administrative Expenses 52,000
Selling Expenses 45,000
Loss on Sale of Investment 500
Total Expenses 317,500
Net Income $ 32,500
ABC Music Co.
Comparative Balance Sheets
June 30 2016 and 2015
Assets
2016 2015
Cash 4,500 $ 15,000
Accounts Receivable (net) 35,000 27,500
Inventory 40,000 50,000
Prepaid Expenses 3,000 2,500
Long Term Investments 20,000 25,000
Plant and Equipment 80,000 40,000
Accumulated Depreciation (20,000) (12,000)
Total Assets $162,500 $148,000
Liabilities
Accounts Payable $ 2,000 $ 6,000
Wages Payable 220 260
Taxes Payable 780 740
Notes Payable 20,000 12,000
Total Liabilities $23,000 $ 19,000
Stockholders Equity
Common Stock $ 65,000 $ 65,000
Retained Earnings 81,500 64,000
Total Paid in Capital and Retained Earnings 146,500 129,000
Less: Treasury Stock ( 7,000) 0
Total Stockholders Equity $139,500 $129,000
Total Liabilities and Stockholders Equity $162,500 $148,000
Additional Information:
A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
A long term investment was sold for $4,500.
The outstanding notes are long term. An $8,000 note was issued during 2016.
Common stock was repurchased.