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Concept explainers
Statement of Cash Flows, Indirect Method, Complex Accounts, Disclosures. Using the data provided in P22.5, prepare the statement of cash flows for The Khan Group using the direct method. Provide all required disclosures.
The Khan Group Balance Sheets At December 31 |
|||
Assets | Current Year | Prior Year | |
Current Assets | |||
Cash | $ 15,000 | $ 12,000 | |
Trading Debt Investments | 36,000 | 30,000 | |
Accounts Receivable - net | 65,000 | 35,000 | |
Merchandise Inventory | 105,000 | 115,000 | |
Total Current Assets | $ 221,000 | $ 192,000 | |
Noncurrent Assets | |||
Investments in Affiliate Companies | $ 161,500 | $ 100,500 | |
Property. Plant, and Equipment - net | 1,533,050 | 1,128,580 | |
Intangible Assets - net | 95,200 | 88,000 | |
Total Noncurrent Assets | $1,789,750 | $ 1,317,080 | |
Total Assets | $2,010,750 | $1,509,080 | |
Liabilities |
Current Liabilities | ||
Current Portion of Long-Term Debt | $ 6,000 | $ 4,500 |
Accounts Payable | 87,500 | 92,500 |
Dividends Payable | 5,000 | 0 |
Income Taxes Payable | 28,500 | 30,000 |
Total Current Liabilities | $ 127,000 | $ 127,000 |
Noncurrent Liabilities | ||
Bonds Payable | $ 425,000 | $ 425,000 |
Less: Discount on Bonds | (87,500) | (100,250) |
Notes Payable | 52,500 | 10,000 |
3,750 | 1,250 | |
Net Obligations under Pension Plans | 45,000 | 22,630 |
Total Noncurrent Liabilities | $ 438,750 | $ 358,630 |
Total Liabilities | $ 565,750 | $ 485,630 |
Shareholders' Equity | ||
Common Stock. $1 par value | $ 60,000 | $ 50,000 |
Additional Paid-in Capital in Excess of Par - Common | 132,100 | 122,100 |
Additional Paid-in Capital - Stock Options | 2,900 | 0 |
1,175,000 | 781,850 | |
Accumulated Other Comprehensive Income | 75,000 | 69,500 |
Total Shareholders' Equity | $1,445,000 | $1,023,450 |
Total Liabilities and Shareholders' Equity | $2,010,750 | $1,509,080 |
The Khan Group Income Statement For the Current Year Ended December 31 |
|
Sales | $2,212,040 |
Cost of Goods Sold | 1,327,224 |
Gross Profit | $ 884,816 |
Selling. General, and Administrative Expenses | $ 43,000 |
Unrealized Losses on Trading Portfolio | $ 3,600 |
Pension Expense | 210,500 |
Bad Debt Expense | 1,500 |
17,700 | |
Amortization Expense | 6,750 |
Total Operating Expenses | $ 283,050 |
Operating Income | $ 601,766 |
Interest Expense | $ (50,100) |
Investment Income (includes gain on sale) | 50,000 |
Equity Earnings from Affiliate Companies | 118,500 |
Income before Tax | $ 720,166 |
Income Tax Expense | (288,066) |
Net Income | $ 432,100 |
Additional information
- The company classifies its current investments as trading securities. During the current year it sold trading securities that had been acquired for $34,500. Treat the trading securities as an investing activity.
- The company reported accounts receivable net of the allowance for
bad debts . - The company acquired equipment during the year and made no disposals Paid cash.
- The company did not acquire nor dispose of intangible assets during the year.
- The company included a $40,500 gain on the sale of trading investments in investment income on the income statement.
- The change in accumulated other comprehensive income is the result of pension adjustments.
- There were no additional investments in affiliate companies during the year.
- There were no debt issuances during the year.
Required
Prepare the company's cash flow statement for the current year under the indirect method. Provide all required disclosures.
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