Question: Refer to the information reported about Gazelle
Refer to the information reported about Gazelle Corporation in Problem 12-1B.
RequiredPrepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.
a. Net income was $158,100.
b. Accounts receivable decreased.
c. Merchandise inventory decreased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $38,600.
In Problem 12-1B
Gazelle Corporation, a merchandiser, recently completed its calendar-year 2013 operations. For the year,
(1) all sales are credit sales,
(2) all credits to Accounts receivable reflect cash receipts from customers,
(3) all purchases of inventory are on credit,
(4) all debits to Accounts payable reflect cash payments for inventory, and
(5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s balance sheets and income statement follow.
Additional Information on Year 2013 Transactions
a. The loss on the cash sale of equipment was $2,100 (details in b).
b. Sold equipment costing $51,000, with accumulated depreciation of $22,850, for $26,050 cash.
c. Purchased equipment costing $113,250 by paying $43,250 cash and signing a long-term note
payable for the balance.
d. Borrowed $5,000 cash by signing a short-term note payable.
e. Paid $47,500 cash to reduce the long-term notes payable.
f. Issued 3,000 shares of common stock for $15 cash per share.
g. Declared and paid cash dividends of $53,600.
In Exhibit 12A.1
Transcribed Image Text:
GAZELLE CORPORATION Comparative Balance Sheets December 31, 201I3 and 2012 2013 2012 Assets Cash $123,450 $ 61,550 GAZELLE CORPORATION Accounts receivable 77,100 80,750 Income Statement For Year Ended December 31, 2013 Merchandise inventory 240,600 250,700 Prepaid expenses Equipment .. Accum depreciation-Equipment Total assets 15,100 17,000 Sales $1.185,000 262.250 200,000 Cost of goods sold Gross profit . Operating expenses Depreciation expense. 595,000 (110,750) $607.750 (95,000) $515,000 590,000 $ 38,600 362,850 Liabilities and Equity' data-toggle="tooltip" data-placement="top" title="Click to view definition...">Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par Paid-in capital in excess of par, common stock $ 17,750 $102.000 Other expenses 15,000 10,000 Total operating expenses 401,450 100,000 77,500 188,550 Ocher gains (losses) Loss on sale of equipment 215,000 200,000 (2.100) 30,000 Income before taxes 186,450 Retained earnings Total liabilities and equity 230.000 $607,750 125,500 Income taxes expense 28,350 $S15,000 Net income S 158,100 GENESIS Spreadsheet for Statement of Cash Flows-Indirect Method For Year Ended December 31, 2013 Analysis of Changes Dec. 31, 2012 Dec. 31, Debit Credit 2013 Balance Sheet-Debit Bal. Accounts $ 12,000 40,000 ) $ 20,000 70,000 ) 4,000 Cash $ 17,000 60,000 84,000 6,000 250,000 $417,000 Accounts receivable Merchandise invantory Prepaid expenses Plant assets 14,000 2,000 70,000 A $ 30,000 210,000 ) $336,000 14 Balance Sheet-Credit Bal. Accounts $ 48,000 40,000 12,000 N 5,000 24,000 $ 60.000 35.000 Accumulated depreciation Accounts payable Interest payable Income taxes payable Notes payable Common stock, $5 par value Retained eamings 4,000 0 12,000 1,000 2.000 22,000 10,000 60,000 64,000 O 34,000 A 90,000 15,000 38,000 ఆ,000 95,000 88,000 m) 6336,000 112.000 $417.000 23 14,000 A Statement of Cash Flows Operating activities Net income 38,000 Increase in accounts receivable 20,000 Increase in merchandise inventory Increase in prepaid expenses Decrease in accounts payable Decrease in interest payable Increase in income tawes payable Depreciation expense Loss on sale of plant assets 14,000 2,000 5,000 1,000 32 10,000 24,000 6.000 bs Gain on retirement of notes 16,000 Investing activities Racepts from sale of plant assets Paymant tor purchase of plart assets Financing activties Paymant so resre notes Rocepts from issung stock Paymert of cash dividends 12,000 at) 10,000 18,000 15,000 14,000 Noncash Investing and Financing Activities Purchase of plant assets with notes 2) 60,000 at) 60,000 $337,000 $337.000
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