Reference no: EM132707719
An income statement and comparative balance sheets for Julian Corp follows:Julian Corp.Income Statement
For the Year Ended December 31, 2015
Revenues and gains:
Sales revenue $670,000
Interest revenue 15,000
Gain on sale of machine 5,000
Total revenues and gains $690,000
Expenses and losses:
Cost of goods sold $390,000
Salaries and wages 60,000
Depreciation 40,000
Insurance 12,000
Interest 15,000
Income taxes 50,000
Loss on retirement of bonds 3,000
Total expenses and losses 570,000
Net income $120,000
Julian Corp
Comparative Balance Sheets
December 31
2015 2014
Cash $ 35,000 $ 46,000
Accounts receivable 63,000 57,000
Inventory 84,000 92,000
Prepaid insurance 12,000 18,000
Total current assets $194,000 $213,000
Long-term investments $120,000 $ 90,000
Land 150,000 100,000
Property and equipment 320,000 280,000
Accumulated depreciation (100,000) (75,000)
Total long-term assets $490,000 $395,000
Total assets $684,000 $608,000
Accounts payable $ 38,000 $ 31,000
Salaries and wages payable 7,000 9,000
Income taxes payable 8,000 5,000
Total current liabilities $ 53,000 $ 45,000
Notes payable $ 85,000 $ 35,000
Bonds payable 200,000 260,000
Total long-term liabilities $285,000 $295,000
Capital stock $100,000 $ 75,000
Retained earnings $246,000 $193,000
Total stockholders' equity $346,000 268,000
Total liabilities and SE $684,000 $608,000
Additional Information
- Long-term investments were purchased for $30,000. The securities are classified as available for sale.
- Land was purchased by issuing a $50,000 note payable.
- A machine with an original cost of $35,000 was sold.
- Bonds with a face value of $60,000 were retired by paying $63,000 in cash.
Required
Problem 1: Prepare statement of cash flows for 2015 using the direct method. Include supplemental schedules to report any noncash investing and financing activities.
Problem 2: Re-compute cash flow under operating activity using indirect method. (Operating section only)
Problem 3: Interpret the result of cash flow statement.