Reference no: EM133081360
Question - Flounder's Custom Clothing (FCC) sells branded clothing to resorts and corporations. The company's comparative financial statements are presented below.
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FLOUNDER'S CUSTOM CLOTHING STATEMENT OF FINANCIAL POSITION December 31
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Current Assets
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2020
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2019
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Cash
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150,000
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78,500
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Accounts receivable
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29,000
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25,000
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Inventory
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70,000
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44,800
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Prepaid expenses
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10,400
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2,900
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Total current assets
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259,400
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151,200
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Property and equipment
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Property and equipment
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99,000
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143,000
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Less: Accumulated depreciation
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54,800
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76,000
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Net property and equipment
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44,200
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67,000
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TOTAL ASSETS
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$303,600
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$218,200
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Current liabilities
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Accounts payable
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25,700
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30,400
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Salaries payable
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9,400
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5,000
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Interest payable
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4,800
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8,400
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Total current liabilities
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39,900
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43,800
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Loan payable
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113,000
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85,000
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Total liabilities
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152,900
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128,800
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Shareholders' equity
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Common shares
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21,000
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1,600
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Retained earnings
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129,700
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87,800
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Total shareholders' equity
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150,700
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89,400
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$303,600
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$218,200
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FLOUNDER'S CUSTOM CLOTHING INCOME STATEMENT For the Years Ended December 31
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2020
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2019
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Sales revenue
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905,000
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727,000
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Cost of sales
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667,000
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542,000
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Gross margin
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238,000
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185,000
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Expenses
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Salary expense
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120,000
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106,000
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Interest expense
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5,200
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1,900
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Other expenses
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8,000
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6,300
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Depreciation expense
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10,000
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12,200
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Total expenses
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143,200
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126,400
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Operating income
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94,800
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58,600
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Loss disposal of equipment
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7,800
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900
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Income tax expense
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23,700
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18,300
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Net income
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63,300
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39,400
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Following is additional information concerning FCC's transactions during the year ended December 31, 2020:
Equipment costing $34,000 was purchased by paying $24,000 cash and issuing 400 common shares.
Equipment costing $78,000 that was purchased at the beginning of 2019 was sold at the end of 2020 for $39,000. Straight-line depreciation had been used with an expected asset life of 5 years and a residual value of $0.
The "other expenses" relate to prepaid items.
In order to supplement its cash, FCC increased its bank loan by $28,000.
Cash dividends of $21,400 were paid at the end of the fiscal year.
Cost of sales includes $183,000 of direct labour costs.
Required - Prepare a statement of cash flows for FCC for the year ended December 31, 2020, using the indirect method. FCC follows ASPE.