Solution-Prepare travis engineering''s statement of cash

Prepare travis engineering''s statement of cash flows

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Reference no: EM131643157

Question - Travis Engineering presented the following comparative balance sheet:

TRAVIS ENGINEERING Balance Sheet December 31, 20X2 and 20X3
Assets	20X3	20X2
Cash	$672,200	$145,300
Accounts receivable	219,600	175,600
Inventories	234,500	316,900
Land	1,300,000	300,000
Building and equipment	900,000	856,000
Less: Accumulated depreciation	(501,800)	(435,000)
Total assets	$2,824,500	$1,358,800

Liabilities
Accounts payable	$111,100	$93,400
Utilities payable	2,500	4,000
Interest payable	5,000	-
Long-term note payable	1,000,000	-
Stockholders' equity
Common stock, $1 par	300,000	250,000
Paid in capital in excess of par	560,000	450,000
Retained earnings	845,900	561,400
Total liabilities and equity	$2,824,500	$1,358,800

Additional information about transactions and events occurring in 20X3 is as follows:

Dividends of $105,700 were declared and paid.
Accounts payable and accounts receivable relate solely to purchases and sales of inventory.
The increase in land resulted from the purchase of land via issuance of the long-term note payable. No buildings were purchased or sold. Equipment was purchased.
In January of 20X3, equipment with an original cost of $75,000 was sold for $50,000.
The increase in paid-in capital all resulted from issuing additional shares for cash.

The income statement for the year ending 20X3 follows:

TRAVIS ENGINEERING Income Statement For the Year Ending December 31, 20X3
Sales		$2,856,000
Cost of goods sold		1,576,300
Gross profit		$1,279,700
Operating expenses and other
Salaries	$433,500
Utilities	64,200
Interest	60,000
Depreciation	76,800
Loss on sale of equipment	15,000	649,500
Income before income tax		630,200
Income tax		240,000
Net income		$390,200

Prepare Travis Engineering's statement of cash flows for the year ending 20X3. Use the direct approach, and prepare the supplemental reconciliation of net income to operating cash flows.

Reference no: EM131643157

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Prepare travis engineering''s statement of cash flows

Reference no: EM131643157

Reference no: EM131643157

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