Reference no: EM131764926
Exercise - Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
12/31/17 12/31/16
Cash$6,000 $7,000
Accounts receivable62,000 51,000
Short-term debt investments (available-for-sale)35,000 18,000
Inventory40,000 60,000
Prepaid rent5,000 4,000
Equipment154,000 130,000
Accumulated depreciation-equipment(35,000)(25,000)
Copyrights46,000 50,000
Total assets$313,000 $295,000
Accounts payable$46,000 $40,000
Income taxes payable4,000 6,000
Salaries and wages payable8,000 4,000
Short-term loans payable8,000 10,000
Long-term loans payable60,000 69,000
Common stock, $10 par100,000 100,000
Contributed capital, common stock30,000 30,000
Retained earnings57,000 36,000
Total liabilities & stockholders' equity$313,000 $295,000
BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue$338,150
Cost of goods sold175,000
Gross profit163,150
Operating expenses120,000
Operating income43,150
Interest expense$11,400
Gain on sale of equipment2,000 9,400
Income before tax33,750
Income tax expense6,750
Net income$27,000
Additional information:
1. Dividends in the amount of $6,000 were declared and paid during 2017.
2. Depreciation expense and amortization expense are included in operating expenses.
3. No unrealized gains or losses have occurred on the investments during the year.
4. Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2017.
Required - Make a statement of cash flows with this information using the indirect method.