Reference no: EM133165707
Question - Davidson Company has the following comparative balance sheet data available:
|
12/31/2021
|
12/31/2020
|
|
Cash
|
$50,000
|
$80,000
|
|
Accounts receivable, net
|
150,000
|
100,000
|
|
Inventory
|
100,000
|
70,000
|
|
Prepaid rent
|
30,000
|
10,000
|
|
Total current assets
|
$330,000
|
$260,000
|
|
Equipment
|
$400,000
|
$200,000
|
|
Accumulated depreciation
|
(60,000)
|
(50,000)
|
|
Total Assets
|
$670,000
|
$410,000
|
|
|
|
|
Accounts payable
|
$50,000
|
$40,000
|
|
Salaries payable
|
40,000
|
40,000
|
|
Bonds payable
|
0
|
50,000
|
|
Common stock, $10 par
|
350,000
|
100,000
|
|
Retained earnings
|
230,000
|
180,000
|
|
Total liabilities & stockholders' equity
|
$670,000
|
$410,000
|
Additional information:
1. The company reports net income of $120,000 and depreciation expense of $20,000 for the year ending December 31, 2021.
2. Dividends declared and paid in 2021, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2021.
The company also reports the following income statement for the year ending December 31, 2021:
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Sales
|
|
$1,050,000
|
|
Expenses:
|
|
|
|
Cost of goods sold
|
630,000
|
-
|
|
Salaries expense
|
200,000
|
-
|
|
Rent expense
|
40,000
|
-
|
|
Depreciation expense
|
20,000
|
-
|
|
Interest expense
|
3,000
|
-
|
|
Loss on sale of equipment
|
7,000
|
-
|
|
Total Expenses
|
-
|
900,000
|
|
Income Before Taxes
|
-
|
150,000
|
|
Income tax expense
|
|
30,000
|
|
Net income
|
|
$120,000
|
Required - Using the direct method, prepare the statement of cash flows for the year ending December 31, 2021.