Prepare the statement of cash flows for the year ended

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Assume the same facts as CP12- 4, except for additional data item (a) and the income statement. Instead of item (a) from CP12- 4, assume that the company bought new golf clubs for $ 3,000 cash and sold existing clubs for $ 1,000 cash. The clubs that were sold had cost $ 2,000 and had Accumulated Depreciation of $ 500 at the time of sale. The corrected income statement follows.

Income Statement

Service Revenue…$ 75,000

Salaries and Wages Expense …68,000

Depreciation Expense … 1,000

Loss on Disposal of Equipment …500

Income Tax Expense ... 1,000

Net Income …$ 4,500

Required:

1. Prepare the statement of cash flows for the year ended December 31 using the indirect method.

 

2. Use the statement of cash flows to evaluate the company’s cash flows.

Reference no: EM13865716

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