What amount was paid to acquire equipment

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Question - Eastern Corp.

Use the following selected data and additional information from the records of Eastern Corp. to complete the requirements.

Balance Sheet Data 2018 2017

Accounts receivable $36,000 $42,000

Inventories 28,000 25,000

Accounts payable 31,000 35,000

Salaries payable 2,000 1,000

Equipment 60,000 40,000

Accumulated depreciation 12,000 16,000

Bonds payable 50,000 100,000

Common stock 150,000 100,000

Retained earnings 38,000 20,000

Income Statement Data 2018

Net sales $420,000

Cost of goods sold 300,000

Operating expenses (excluding depreciation expense) 84,000

Net income 30,000

Gain on sale of equipment (included in net income above) 2,000

Additional information:

A) Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000 during 2018.

B) Common stock was issued to retire bonds payable during 2018.

C) The only items affecting retained earnings in 2018 were net income and dividends declared and paid.

REQUIRED

(1) What amount was paid to acquire equipment during 2018?

(2) What amount was recorded as depreciation expense during 2018?

(3) What amount was declared and paid for dividends during 2018?

(4) Prepare the Operating Activities section of statement of cash flows for Eastern Corp. for 2018 if the direct method is used to determine net cash flow from operating activities. Use good form.

Reference no: EM131871765

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