PA12-6 (Algo) Preparing and Interpreting a Statement of Cash Flows (Direct Method) [LO 12-3, LO 12-4, LO 12-5, LO 12-6]

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Pa12 6 Algo Preparing And Interpreting A Statement Of Cash Flows Direct Method Lo 12 3 Lo 12 4 Lo 12 5 Lo 12 6 1 (154.56 KiB) Viewed 20 times

PA12-6 (Algo) Preparing and Interpreting a Statement of Cash Flows (Direct Method) [LO 12-3, LO 12-4, LO 12-5, LO 12-6] Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information. Current Year Previous Year Balance Sheet at December 31 Cash $ 3,920 Accounts Receivable $ 6,060 830 4,730 1,610 4,300 Equipment Accumulated Depreciation-Equipment (1,360) (1,180) Total Assets $ 10,260 $ 8,650 Accounts Payable $ 770 $ 1,200 Salaries and Wages Payable 750 Notes Payable (long-term) 570 1,600 4,300 500 Common Stock 4,300 Retained Earnings 3,020 1,900 Total Liabilities and Stockholders' Equity $ 10,260 $ 8,650 Income Statement Service Revenue $ 40,900 Salaries and Wages Expense 38,400 180 Depreciation Expense Income Tax Expense 1,200 Net Income $ 1,120 Additional Data:
Additional Data: a. Bought new hockey equipment for cash, $430. b. Borrowed $1,100 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the direct method. (Amounts to be deducted should be indicated with a minus sign.) HEADS UR COMPANY
HEADS UP COMPANY Statement of Cash Flows For the Year Ended December 31 $ Cash Flows from Operating Activities: Cash Collected from Customers Cash Paid for Salaries and Wages to Employees Cash Paid for Other Operating Expenses Cash Paid for Income Tax Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payments to Purchase Equipment Net Cash Provided by Investing Activities Cash Flows from Financing Activities: Cash Proceeds from Bank Loan Net Cash Provided by Financing Activities Net Increase in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 780 570 430 1,780 0 0