Wu company Income Statement For the Year Ended December 3120

Wu company Income Statement For the Year Ended December 31,2011 Sales Cost of goods sold Gross margin Operating expenses (including depreclation expense of $46,800) Incom¢ from operations Other income (expenses) $1,609,000 127 $ 481,200 449.400 $ 31,800 Gain on sale of furniture and fixtures $ 7,000 23,200) (16,200) Interest expense Income before income taxes Income taxes expense Net Income 15,500 Wu Company Comparative Balance Sheets December 31, 2011 and 2010 2011 2010 Assets Cash Accounts recelvable (net) Merchandise inventory Prepaid rent Furniture and fixtures Accumulated depreclation-furniture and foxtures Total assets $164,800 50,000 165,200 200,000 350,000 450,000 3,000 148,000 144,000 (42,000) (24 Liabilities and Stockholders\' Equity Accounts payable Income taxes payable Notes payable (long-term) Bonds payable o Common stock, par value Additional pald-in capital Retained earnings Total labilities and stockholders\' equity $143,400 $200,400 1400 4,400 40,000 20,000 100,000 200,000 240,000 200,000 181,440 121,440 81,760 76,760 $788,000 823,000 Additional information A. Sold Furniture with an original cost of $35,600, at a gain of $7000. B. Purchased Furniture in the amount of $39,600 C. Paid $20,000 on an existing note payable. D. Borrowed $40,000 on a new note. E. No new bonds were issued during the period. F. New stock was issued for cash. Prepare a statement of cash flows for Wu using the indirect method.

Solution

WU Company STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 December 2011 Cash Flow Statement by indirect Method Detail Amount in $) Cash Generated from Operating Activities Net Income 11000 Add : Depreciation ( Not Cash inflow/outflow) 46800 Less: Gain on sale of furniture & Fixture -7000 Add: Interest Paid 23200 Net change in working capital Decrease in Inventory 100000 Prepaid rent 1000 Decrease in Account payable -57000 Decrease in Income tax payable -3000 41000 Net Cash Provided by Operating activities (A) 115000 Cash Generated from Investment Activities Purchase of Furniture -39600 Sale of Furniture including profit( 35600+7000) 42,600 Net Cash provided by Investing activities (B) 3,000 Cash Generated from Finance   Activities Paid Note payable -20000 Borrowed new Note payable 40000 New Stock issued 40000 Paid in Capital received 60000 Interest paid -23200 Bond Reddemed -100000 Net Cash provided by Financiang Activities © -3200 Net Cash Generated ( A+B+C) 114,800 Cash closing Balance 164800 Cash opening Balance 50000 114800