Explore BrainMass

Preparing the Statement of Cash Flows - Direct Method

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

The income statement and additional data of Capitol Hill Corporation follow:

Capitol Hill Corporation
Income Statement
Year ended June 30, 2006

Sales revenue - $229,000
Dividend revenue - 8,000 $237,000
Cost of goods sold - $103,000
Salary expense - 45,000
Depreciation expense - 28,000
Advertising expense - 12,000
Interest expense - 2,000
Income tax expense - 9,000 199,000
Net income - $38,000

Additional data:
a. Collections from customers are $15,000 more than sales.
b. Dividend revenue, interest expense, and income tax expense equal their cash amounts.
c. Payments to suppliers are the sum of cost of goods sold plus advertising expense.
d. Payments to employees are $1,000 more than salary expense.
e. Acquisition of planet assets is $101,000
f. Cash receipts from sale of land total $24,000
g. Cash receipts from issuance of common stock total $30,000
h. Payment of long term note payable is $15,000
i. Payment of dividends is $11,000
j. Cash balance, June 30, 2005, was $20,000; June 30, 2006, was $27,000

Please prepare Capitol Hill statement of cash flows for the year ended June 30, 2006. Use the direct method and use the attached spreadsheet for format. Any help is appreciated. Thank you

© BrainMass Inc. brainmass.com March 21, 2019, 9:10 pm ad1c9bdddf


Solution Summary

This solution illustrates how to prepare a statement of cash flows under the direct method.