- USA Graphics' balance sheet from 20X7 to 20X8 showed increases in cash, inventory, and prepaid expenses, but decreases in accounts receivable, accounts payable, taxes payable, and accrued liabilities.
- The income statement showed net income of $227,300 from sales of $691,800 with costs of goods sold of $223,000 and expenses of $222,000, including depreciation and interest.
- Other events included purchasing long-term investments and equipment, selling land, issuing stock, repaying debt, and paying dividends.
HVAC System | Audit of HVAC System | Audit and regulatory Comploance.pptx
Cash flow information Direct and indirect methodsThe comparat.docx
1. Cash flow information: Direct and indirect methods
The comparative year-end balance sheets of USA Graphics,
Inc., revealed the following activity in the company's current
accounts:
20X8
20X7
Increase / Decrease)
Current assets
Cash
$55,400
$35,200
$20,200
Accounts receivable (net)
83,800
88,000
-4,200
Inventory
243,400
233,800
9,600
Prepaid expenses
25,400
24,200
1,200
3. The accounts payable were for the purchase of merchandise.
Prepaid expenses and accrued liabilities relate to the firm's
selling and administrative expenses. The company's condensed
income statement follows.
USA GRAPHICS INC.
Income Statement
for the Year Ended December 31, 20X8
Sales
$691,800
Less: Cost of goods sold
7. Long-term investments were purchased for cash at a cost of
$64,200.
2.
Cash proceeds from the sale of land totaled $74,200.
3.
Store equipment of $34,000 was purchased by signing a short-
term note payable. Also, a $140,000 telecommunications system
was acquired by issuing 3,000 shares of preferred stock.
4.
A long-term note of $42,200 was repaid.
5.
Twenty thousand shares of common stock were issued at $5.19
per share.
6.
The company paid cash dividends amounting to $125,000.
Instructions:
a.
Prepare the operating activities section of the company's
statement of cash flows, assuming use of:
1.
The direct method.
2.
The indirect method.
b.
Prepare the investing and financing activities sections of the