Question: Refer to the information reported about Gazelle
Refer to the information reported about Gazelle Corporation in Problem 16-3B.
Required
Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.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. Inventory decreased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $38,600.
g. Sold equipment costing $51,000, with accumulated depreciation of $22,850, for $26,050 cash. This yielded a loss of $2,100.
h. Purchased equipment costing $113,250 by paying $43,250 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $5,000 cash by signing a short-term note payable.
k. Paid $47,500 cash to reduce the long-term notes payable.
l. Issued 3,000 shares of common stock for $15 cash per share.
m. Declared and paid cash dividends of $53,600.
Information from Problem 16-3B:
Gazelle Corporation, a merchandiser, recently completed its calendar-year 2015 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 2015 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.
Exhibit 16A.1:
Transcribed Image Text:
GAZELLE CORPORATION Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets $ 61,550 Cash $123,450 Accounts receivable 77,100 80,750 250,700 Inventory Prepaid expenses 240,600 15,100 17,000 Total current assets 456,250 410,000 Equipment . 262,250 200,000 Accum. depreciation-Equipment . (110,750) $607,750 (95,000) $515,000 Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities.. $ 17,750 $102,000 15,000 10,000 1 1,000 77,500 32,750 Long-term notes payable 100,000 Total liabilities 132,750 189,500 Equity Common stock, $5 par . 215,000 200,000 Paid-in capital in excess of par, common stock Retained eamings 30,000 230,000 125,500 Total liabilities and equity $607,750 $515,000 GAZELLE CORPORATION Income Statement For Year Ended December 31, 2015 Sales .... $1,185,000 Cost of goods sold Gross profit ... 595,000 590,000 Operating expenses Depreciation expense Other expenses Total operating expenses $ 38,600 362,850 401,450 188,550 Other gains (losses) Loss on sale of equipment (2,100) Income before taxes 186,450 Income taxes expense 28,350 Net income $ 1 58,100 A B D E F GENESIS Spreadsheet for Statement of Cash Flows Indirect Method For Year Ended December 31, 2015 Doc. 31, Analysis of Changes Doc. 31, 2014 Debit Credit 2015 6 Balance Sheet-Debit Bal. Accounts Cash Accounts receivable Inventory Prepaid expenses Plant assets $ 12,000 40,000 (b) s 20,000 70,000 (c) 4,000 (d) 210,000 (k1) $336.000 $ 17,000 60,000 84,000 6,000 250,000 $417.000 8 14,000 2,000 60,000 0) 10 11 $ 20,000 12 13 Balance Sheet-Credit Bal. Accounts 14 Accumulated depreciation $ 48,000 0 40,000 (e) 4,000 () 12,000 64,000 0 80,000 88.000 (m) $336,000 12,000 (h) 5,000 1,000 (g) 34,000 (k2) $ 60,000 35,000 3,000 22,000 90,000 95,000 112.000 $417.000 24,000 Accounts payable 16 Interest payable 15 17 Income taxes payable Notes payable 10,000 60,000 15,000 38,000 18 Common stock, $5 par value Retained eamings 19 20 14,000 (a) 21 22 Statement of Cash Flows 23 24 25 26 27 28 Operating activities Net income Increase in accounts receivable Increase in inventory Increase in prepaid expenses Decrease in accounts payable Decrease in interest payable Increase in income taxes payable Depreciation expense Loss on sale of plant assets Gain on retirement of notes (a) 38,000 (b) (c) (d) (e) 20,000 14,000 2,000 5,000 1,000 29 30 31 32 33 (g) (h) 10,000 24,000 6,000 16,000 34 Investing activities Receipts from sale of plant assets Financing activities Payment to retire notes Receipts from issuing stock Payment of cash dividends 35 2,000 36 37 38 39 40 18,000 15,000 (m) 14,000 41 Noncash Investing and Financing Activities 42 Purchase of plant assets with notes 60,000 (k1) (k2) $317.000 60,000 $317.000
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