CHAPTER 13 CHECKPOINT PROBLEM #2
Wilma Company had the following information available at the end of 2018:
Sales 441,000
Cost of Goods Sold 205,200
Gross Profit 235,800
Operating Expenses:
Depreciation 14,800
Salaries 79,400
Insurance 10,300
Utilities 11,900
Total Operating Expenses 116,400
Operating Income 119,400
Other Expenses/Losses:
Gain on Sale of Equipment 4,500
Interest Expense 6,400 (1,900)
Income Before Taxes 117,500
Income Tax Expense 19,900
Net Income 97,600
The following additional information is available:
a. Investments costing $38,000 were purchased for cash.
b. Equipment costing $20,000 with accumulated depreciation of $2,300 was sold for $22,200 cash.
c. Equipment costing $90,000 was purchased–$60,000 cash was paid and a $30,000 long-term promissory
note was signed for the balance due.
d. A cash dividend of $45,000 was declared and paid to shareholders during the year.
e. $1,000 of the long-tern note payable was paid.
f. 5,000 shares of $1-par value common stock were issued for $3 per share cash.
g. Land costing $24,700 was sold for $24,700 cash.
REQUIRED:
A. Complete a set of cash flow T-accounts using the indirect method of computing cash flows from operations.
B. Complete a set of cash flow T-accounts using the direct method of computing cash flows from operations.
Income Statement
For Year Ended December 31, 2018
Beg 15,800 Beg 26,500 Beg 64,600
OPERATING:
End 25,800 End 71,100
Beg 14,900 Beg 25,000
End 20,000 End 63,000
Beg 34,700 Beg 184,000
End 10,000 End 254,000
87,100 Beg 35,500 Beg
INVESTING: 99,600 End 30,000 End
15,500 Beg 13,000 Beg
18,000 End 12,100 End
FINANCING:
73,000 Beg 50,000 Beg
102,000 End 55,000 End
52,700 Beg 38,700 Beg
End 26,800
62,700 End 91,300 End
Income Taxes Payable
Long-Term Notes Payable Common Stock, $1-par
APIC Retained Earnings
CASH Accounts Receivable
Prepaid Insurance
Land
Accum. Depr.-Equip.
Salaries Payable
Merchandise Inventory
Investments
Equipment
Accounts Payable
Beg 15,800 Beg 26,500 Beg 64,600
OPERATING:
Cash Receipts From: Cash Payments For: End 25,800 End 71,100
Beg 14,900 Beg 25,000
End 20,000 End 63,000
Beg 34,700 Beg 184,000
End 10,000 End 254,000
87,100 Beg 35,500 Beg
INVESTING: 99,600 End 30,000 End
15,500 Beg 13,000 Beg
18,000 End 12,100 End
FINANCING:
73,000 Beg 50,000 Beg
102,000 End 55,000 End
52,700 Beg 38,700 Beg
End 26,800
62,700 End 91,300 End
CASH Accounts Receivable
Prepaid Insurance
Land
Accum. Depr.-Equip.
Merchandise Inventory
Investments
Equipment
Accounts Payable
Salaries Payable Income Taxes Payable
Long-Term Notes Payable Common Stock, $1-par
APIC Retained Earnings
