The comparative balance sheets for 2015 and 2016 and the statement of income are
ID: 2454120 • Letter: T
Question
The comparative balance sheets for 2015 and 2016 and the statement of income are given below for Big Company. Additional information from Big’s accounting records is provided also.
Big Company
Balance Sheets
Cash 2016=114 2015=100
Accts rec 2016=192 2015=161
Inventory 2016=145 2015=140
Land 2016=106 2015=130
Ppe 2016=710 2015=540
a/d ppe 2016=(199) 2015=(145)
accts pay 2016= 42 2015=49
salary pay 2016=5 2015=7
interest pay 2016=7 2015=6
tax pay 2016=7 2015=11
lt note pay 2016=0 2015=34
bond pay 2016=308 2015=240
comm stock 2016=405 2015=340
apic 2016=190 2015=170
r/e 2016=104 2015=69
INCOME STATEMENT
BIG CO.
FOR THE YEAR 2016
SALES =600
COGS= 270
SALARY EXP=66
DEPRECIATION EXP=54
INTEREST EXP=17
LOSS ON SALE LAND=4
INCOME TAX EXP=89
TOTAL EXP=500
INCOME=100
ADDITIONAL INFORMATION:
THERE WAS ONLY 1 TRANSACTION INVOLVING LAND THIS YEAR
THERE WAS ONLY 1 PURCHASE OF PPE THIS YEAR
THE LT NOTE WAS PAID AT MATURITY ON JAN. 1 2016
THE BONDS WERE ISSUED AT FACE VALUE
THERE WAS ONLY 1 COMMON STOCK TRANSACTION (HINT: IT SOLD ABOVE PAR)
THE COMPANY PAID A DIVIDEND
PREPARE A STATEMENT OF CASH FLOWS, YOU MAY USE EITHER THE DIRECT OR INDIRECT METHOD FOR CASH FROM OPERATIONS.
Explanation / Answer
Cash from operations for 2016 (Indirect method) USD$
Net Income 100
Add: Depreciation 54
Add: Interest Expense 17
Add:Loss on sale of property 4
Add: Income tax Expense 89
Working capital changes
Less: Increase in accounts receivable ( 31)
Less: increase in inventory (5)
Less: Decrease in trade payable (7)
Less: Decrease in salary payable (2)
Less: interest paid (6+17-7) (16)
Less income tax paid (11+89-7) (93)
Cash From Operations $110
Dividend information is missing otherwise we have dedudected dividend paid from cash from operations