Prepare the financing and investing activities sections

Assignment Help Financial Accounting

Reference no: EM134154

Question :

The comparative year-end balance sheets of Sign Graphics, Inc., revealed the subsequent activity in the company's existing accounts:

20X5 20X4 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

Current liabilities

Accounts payable $123,600 $140,600 ($17,000)

Taxes payable 43,600 49,200 -5,600

Interest payable 9,000 6,400 2,600

Accrued liabilities 38,800 60,400 -21,600

Note payable 44,000 - 44,000

The accounts payable were for the purchase of goods. Prepaid expenses and accrued liabilities relate to the firm's administrative and selling expenses. The company's condensed income statement as given.

SIGN GRAPHICS INC.

Income Statement for the Year Ended 31^st December, 20x5

Sales $713,800

Less: Cost of goods sold 323,000

Gross profit $390,800

Less: Selling & administrative expenses $186,000

Depreciation expense 17,000

Interest expense 27,000 230,000

Add: gain on sale of land $160,800 21,800

Income before taxes $182,600

Income taxes 36,800

Net income $145,800

Other data:

1. Long-term investments were brought for cash at a cost of $74,600.

2. Cash proceeds from the sale of land totaled $76,200.

3. Store equipment of $44,000 was brought by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock.

4. A long-term note of $49,400 was repaid.

5. Twenty thousand shares of general stock were issued at $5.19 per share.

6. The company paid cash dividends amounting to $128,600.

Instructions:

a. Create the operating activities section of the company's statement of cash flows, considering use of:

1. The indirect method.

2. The direct method.

b. Prepare the financing and investing activities sections of the statement of cash flows.

Reference no: EM134154

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