Reference no: EM132563016
On December 31, 2003, Sampson, Inc.:
a. Obtains $20,000 cash by selling common stock.
b. Obtains $40,000 cash from Loanit Bank. The loan is due on December 31, 2006, and interest of 10% on the balance is due on January 1 of each year, excluding January 1, 2004.
c. Buys land, paying $5,000 cash.
d. Hires a manager to begin work on January 1, 2004. The salary is $1,000 per month, payable on the first of each month, beginning February 1, 2004.
e. Prepays six months' rent on a portable building, paying $3,000 cash. Sampson, Inc.'s balance sheet at the end of 2003 is shown here.
Statement of Financial Position as of December 31, 2003
Cash $ 52.000,00
Total current liabilities None Prepaid rent $ 3.000,00
Total current assets $ 55.000,00
Note Payable $ 40.000,00
Stockholders' equity:
Land $ 5.000,00
Common Stock $ 20.000,00
Total liabilities & Total Assets $ 60.000,00
Stockholders' equity: $ 60.000,00
During the year 2004:
a. Sampson purchases, for 10 cents cash per can, and sells, for 15 cents cash per can, 490,000 cans of Drinkit.
b. On July 1, 2004, Sampson prepays an additional eight months' rent, paying $4,000 cash.
c. Sampson pays a $2,000 cash dividend on December 31, 2004.
Required:
Question 1: Construct a statement of cash flows for the year ended December 31, 2004, for Sampson, Inc. using the direct method and indirect method