Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
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ABC Music Co. |
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Income Statement |
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For the Year Ended June 30, 2016 |
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Net Sales |
$350,000 |
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Less Expenses |
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Cost of Goods Sold |
$200,000 |
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Depreciation Expense |
20,000 |
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Administrative Expenses |
52,000 |
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Selling Expenses |
45,000 |
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Loss on Sale of Investment |
500 |
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Total Expenses |
317,500 |
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Net Income |
$ 32,500 |
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ABC Music Co. |
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Comparative Balance Sheets |
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June 30 2016 and 2015 |
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Assets |
2016 |
2015 |
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Cash |
$ 4,500 |
$ 15,000 |
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Accounts Receivable (net) |
35,000 |
27,500 |
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Inventory |
40,000 |
50,000 |
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Prepaid Expenses |
3,000 |
2,500 |
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Long Term Investments |
20,000 |
25,000 |
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Plant and Equipment |
80,000 |
40,000 |
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Accumulated Depreciation |
(20,000) |
(12,000) |
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Total Assets |
$162,500 |
$148,000 |
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Liabilities |
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Accounts Payable |
$ 2,000 |
$ 6,000 |
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Wages Payable |
220 |
260 |
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Taxes Payable |
780 |
740 |
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Notes Payable |
20,000 |
12,000 |
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Total Liabilities |
$23,000 |
$ 19,000 |
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Stockholders Equity |
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Common Stock |
$ 65,000 |
$ 65,000 |
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Retained Earnings |
81,500 |
64,000 |
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Total Paid in Capital and Retained Earnings |
146,500 |
129,000 |
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Less: Treasury Stock |
( 7,000) |
0 |
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Total Stockholders Equity |
$139,500 |
$129,000 |
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Total Liabilities and Stockholders Equity |
$162,500 |
$148,000 |
Additional Information:
A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
A long term investment was sold for $4,500.
The outstanding notes are long term. An $8,000 note was issued during 2016.
Common stock was repurchased.