Question :
34) Avatar Auto Parts Company uses the direct method to
34) Avatar Auto Parts Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2015:
Avatar Company
Comparative Balance Sheet
December 31, 2015 and 2014
|
|
2015 |
2014 |
Increase / (Decrease) |
|
Cash |
$33,000 |
$13,000 |
$20,000 |
|
Accounts Receivable |
29,000 |
36,000 |
(7,000) |
|
Inventory |
56,000 |
29,000 |
27,000 |
|
Plant and Equipment, net |
126,000 |
92,000 |
34,000 |
|
Total Assets |
$244,000 |
$170,000 |
$74,000 |
|
|
|
|
|
|
Accounts Payable |
$9,000 |
$13,000 |
$(4,000) |
|
Accrued Liabilities |
7,000 |
3,000 |
4,000 |
|
Long-term Notes Payable |
70,000 |
79,000 |
(9,000) |
|
Total Liabilities |
$86,000 |
$95,000 |
$(9,000) |
|
|
|
|
|
|
Common Stock |
$55,000 |
$3,000 |
$52,000 |
|
Retained Earnings |
115,000 |
78,000 |
37,000 |
|
Treasury Stock |
(12,000) |
(6,000) |
(6,000) |
|
Total Stockholders' Equity |
$158,000 |
$75,000 |
$83,000 |
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$244,000 |
$170,000 |
$74,000 |
Avatar Company
Income Statement
Year Ended December 31, 2015
|
Sales Revenue |
$291,300 |
|
|
Interest Revenue |
1,000 |
|
|
Gain on Sale of Plant Assets |
6,000 |
|
|
Total Revenues and Gains |
|
$298,300 |
|
Cost of Goods Sold |
145,000 |
|
|
Salaries and Wages Expense |
49,000 |
|
|
Depreciation Expense—Plant Assets |
16,000 |
|
|
Other Operating Expense |
25,000 |
|
|
Interest Expense |
3,500 |
|
|
Income Tax Expense |
7,800 |
|
|
Total expenses |
|
246,300 |
|
Net Income |
|
$52,000 |
Avatar Company
Statement of Retained Earnings
Year Ended December 31, 2015
|
Retained Earnings, January 1, 2014 |
$78,000 |
|
Add: Net income |
52,000 |
|
Less: Dividends |
15,000 |
|
Retained Earnings, December 31, 2014 |
$115,000 |
Prepare the operating activities section of the statement of cash flows, using the direct method.
