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    Saferoad Corporation: create indirect presentation cash flow

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    Saferoad Corporation has completed its comparative balance sheet and income statement at year-end 2009. Additional information:
    ?   A payment of 57,500 was made on the loan principal during the year.
    ?   Just before year-end, a dividend was distributed to stockholders.
    ?   A parcel of land was acquired early in the year.
    ?   New shares of common stock were sold during the year.

    Comparative Balance Sheet 31-Dec
    2009 2008
    Cash $1,090 $4,000
    Accounts receivable $2,910 $6,150
    Inventory $4,800 $3,880
    Prepaid advertising $700 $1,775
    Buildings and furnishings $40,000 $40,000
    Accumulated depreciation ($10,000) ($8,000)
    Land $27,000 $15,000
    TOTAL ASSETS $66,500 $62,805
    Rent payable $2,000 $4,000
    Taxes payable $1,900 $1,500
    Wages payable $3,300 $2,200
    Loan payable, long-term $19,600 $26,805
    Common stock $31,000 $25,000
    Retained earnings $8,700 $3,300
    TOTAL LIABILITIES AND EQUITY $66,500 $66,500 $62,805

    Income Statement for 2009
    Sales Revenue $350,000
    Cost of goods sold $250,600
    Gross profit $99,400
    Operating expenses:
    Advertising $9,500
    Depreciation $2,000
    Insurance $4,100
    Rent $28,900
    Wages $40,450
    Operating income $14,450
    Interest expense $1,600
    Income before tax $12,850
    Taxes $3,850
    Net Income $9,000

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    https://brainmass.com/business/statement-of-cash-flows/saferoad-corporation-create-indirect-presentation-cash-flow-363958

    Solution Summary

    Cash flow is created from data given with notes and guidance about why each line is needed. A general "rule" is shared that helps to figure out if you add or subtract on reconciling items.

    $2.19