Answered: 2019 2018 Assets: $ 33,200 53,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Erie Company reported the following comparative balance sheets: Additional Information:
1. Net income for 2019 was $20,500.
2. Cash dividends of $7,900 were declared and paid during 2019.
3. Long-term investments with a cost of $28,600 were sold for cash at a gain of $4,100. Additional
long-term investments were purchased for $14,400 cash.
4. Equipment with a cost of $14,800 and accumulated depreciation of $13,500 was sold for
$3,800 cash. New equipment was purchased for $27,350 cash.
5. Depreciation expense was $18,900.
6. A principal payment of $25,000 was made on long-term notes.
7. Common stock was sold for $31,500 cash.
Required:
Prepare a statement of cash flows for Erie using the indirect method to compute net cash flow
from operating activities.

2019
2018
Assets:
$ 33,200
53,000
29,500
2,200
17,600
162,000
(61,600)
$235,900
$ 12,750
44,800
27,500
6,200
31,800
149,450
(56,200)
$216,300
Cash
Accounts receivable
Inventory
Prepaid rent
Investments (long-term)
Property, plant, and equipment
Accumulated depreciation
Total assets
Liabilities and Equity:
Accounts payable
Interest payable
Wages payable
Income taxes payable
Notes payable
Common stock
Retained earnings
Total liabilities and equity
$ 16,900
3,500
9,600
5,500
28,000
100,000
72,400
$235,900
$ 19,500
4,800
7,100
3,600
53,000
68,500
59,800
$216,300

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