Reference no: EM131612706

Problem - The Extra Surplus Company's Balance Sheet for December 31, 2015 and the Income Statement for 2016 are shown below.

Extra Surplus Company Balance Sheet December 31, 2015
Assets
Cash	$16,000
Accounts Receivable	8,000
Inventory	19,200
Property and Equipment, Net	32,000
	$75,200
Liabilities and Stockholders' Equity
Account Payable	$16,000
Notes Payable, Long-term	8,000
Common Stock	32,000
Retained Earnings	19,200
	$75,200

 

Extra Surplus Company Income Statement For the Year Ended December 31, 2016
Sales	$28,600
Cost of goods Sold	6,600
Salaries and Wage Expense	6,600
Interest Expense	2,200
Other Expense	1,100
Net Income	$12,100

Additional data:

Sales were $28,600; $17,600 in cash was received from customers.

Bought new land for cash, $22,000.

Sold other land for its book value of $11,000.

Paid $2,200 principal on the long-term note payable and $2,200 in interest. Issued new shares of stock for $22,000 cash.

Cash dividends of $3,400 were declared and paid to stockholders.

Paid $12,700 on accounts payable.

No inventory purchases were made; other expenses were incurred on account. All wages were paid in cash.

Other expenses were on account.

Required:

a. Prepare a balance sheet at December 31, 2016.

b. Prepare the statement of cash flows using the direct method.