Preparing Financial Statements Alice Springs Merchandise is a retail company that sells general household products. Account balances for the company’s fiscal years ended January 31, 2004, and 2005 are provided on the next page. Changes in balance sheet account balances also are provided. Additional information for the 2005 fiscal year includes the following:
• The company paid $38,802 for additional property and equipment and received cash from the sale of equipment of $1,967.
• Amounts borrowed or repaid are equal to changes in Notes Payable, Current and changes in Notes Payable, Long Term.
• The change in Common Stock is the amount of stock issued or repurchased during the year.
• The balance of Retained Earnings includes the effects of net income and dividends.
Required From the information provided, prepare the following in good form.
A. An income statement containing separate columns for 2005 and 2004.
B. A balance sheet containing separate columns for 2005 and 2004.
C. A schedule like Exhibit 3 in this chapter (page F183) that includes the adjustments necessary to calculate operating cash flow. The adjustments should be the changes in the appropriate account balances.
D. A statement of cash flows for 2005 using the direct method.
E. A statement of cash flows for 2005 using the indirect method.
|
2005 |
2004 |
Change |
|
|
Sales Revenue |
$589,351 |
$530,666 |
|
|
Cost of Goods Sold |
359,504 |
328,343 |
|
|
Wages Expense |
123,764 |
117,136 |
|
|
Rent Expense |
30,116 |
28,052 |
|
|
Depreciation Expense |
24,871 |
22,628 |
|
|
Supplies Expense |
13,555 |
10,751 |
|
|
Cash |
63,172 |
57,845 |
5,327 |
|
Accounts Receivable |
48,386 |
43,106 |
5,280 |
|
Merchandise Inventory |
130,247 |
117,202 |
13,045 |
|
Prepaid Rent |
2,530 |
2,314 |
216 |
|
Supplies |
1,129 |
952 |
177 |
|
Property and Equipment |
365,398 |
328,563 |
36,835 |
|
Accumulated Depreciation |
43,848 |
18,977 |
24,871 |
|
Accounts Payable |
25,953 |
23,674 |
2,279 |
|
Wages Payable |
10,272 |
9,500 |
772 |
|
Unearned Revenue |
12,966 |
11,675 |
1,291 |
|
Notes Payable, Current |
47,249 |
44,249 |
3,000 |
|
Notes Payable, Long Term |
214,838 |
222,467 |
7,629 |
|
Common Stock |
102,629 |
95,581 |
7,048 |
|
Retained Earnings |
153,105 |
123,860 |
29,245 |
|
Dividends Paid |
8,297 |
5,250 |