Exercise 23-13
Sheridan Inc., a greeting card company, had the following statements prepared as of December 31, 2017. SHERIDAN INC.
COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
12/31/17 12/31/16 Cash $6,100 $7,000
Accounts receivable 61,600 51,500
Short-term debt investments (available-for—sale) 34,900 18,100
Inventory 39,900 60,400
Prepaid rent 5,000 4,100
Equipment 154,100 130,300
Accumulated depreciation—equipment (35,000 ) (24,900 )
Copyrights 45,500 50,500
Total assets $312,100 $297,000
Accounts payable $45,800 $39,900
Income taxes payable 4,000 6,000
Salaries and wages payable 8,100 4,000
Short-term loans payable 7,900 10,000
Long-term loans payable 60,500 69,300
Common stock, $10 par 100,000 100,000 Contributed capital, common stock 30,000 30,000
Prepare a statement of cash ?ows using the direct method. (Show amounts that decrease cash flow with either a – sign (9.9. -15,000 or in parenthesis e.g. (15,000).) SHERIDAN INC.
Statement of Cash Flows
Contributed capital, common stock 30,000 30,000
Retained earnings 55,800 37,800 Total liabilities & stockholders’ equity $312,100 $297,000 SHERIDAN INC.
INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 Sales revenue $333,000
Cost of goods sold 174,000
Gross pro?t m
Operating expenses 119,500
Operating income W
Interest expense $11,500 Gain on sale of equipment 2,000 9,500
Income before tax — W
Income tax expense 6,000
Net income $24,000 Additional information: Dividends in the amount of $6,000 were declared and paid during 2017. Depreciation expense and amortization expense are included in operating expenses.
No unrealized gains or losses have occurred on the investments during the year.
Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.