Acc1002_wescott company_statement of cash flows

 

  ACC1002

__________________________________________________________________________

QUESTION 3

The following shows the comparative balance sheets and income statement of Wescott

Company.

Wescott Company

Balance Sheets

At December 31

                                                                                                2011                                       2010

 Assets:

Cash……………………………………………                              $ 85,600                                $ 65,200

Accounts receivable, net……………………….                  72,850                                  56,750

Merchandise inventory…………………………                 157,750                               144,850

Prepaid expenses……………………………….                        6,080                                 12,680

Equipment………………………………………                          280,600                               245,600

Accumulated depreciation-Equipment…………     (80,600)                                (97,600)

Total assets……………………………………….                     $522,280                              $427,480

 Liabilities:

Accounts payable………………………………                    $ 52,850                                $ 45,450

Income taxes payable………………………….                                     15,240                                 12,240

Notes payable (long term)……………………..                 59,200                                 79,200

Total liabilities……………………………………                      $127,290                             $136,890

Equity:

Share Capital………………………………….                         200,000                                 150,000

Share Premium………………………………..                        53,000                                   40,000

Retained earnings……………………………..                    141,990                                 100,590

Total equity………………………………………                     $394,990                              $290,590

Total liabilities and equity………………………               $522,280                              $427,480

 Wescott Company

Income Statement

For Year Ended December 31, 2011

Sales……………………………………………                                                                             $ 488,000

Cost of goods sold……………………….                            $212,540

Depreciation expense…………………………                      43,000

Other operating expenses…………………                   106,260

Interest expense…………………..…………                          6,400                 (368,200)

 Gain on sale of equipment………………………….       4,700

Income before taxes………………………………             124,500

Income taxes expense………………………….                               (41,100)

Net income……………………………………..                       $ 83,400

 

Additional information

 

1. A $20,000 note payable is retired at its carrying amount in exchange for cash.

2. The only changes affecting retained earnings are net income and cash dividends paid.

Cash dividends paid is to be classified under financing activities.

3. New equipment is acquired for $120,000 cash.

4. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.

5. Prepaid expenses relate to Other operating expenses on the income statement.

6. Interest paid is to be classified under operating activities.

 

Required:

a) Prepare a statement of cash flows for the year ended December 31, 2011 using the indirect method based on IFRS.

b) Explain the effect, if any, of each of the following transactions and events on Wescott

Company’s profit and on its cash flows:

i. Payment of a supplier’s invoice.

ii. An accrued expense at the end of an accounting period.

iii. Payment of a dividend.

iv. Purchase of inventory for cash.

v. Investing spare or unused cash in a high-interest bank account, repayable at 7 days’ notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premium Custom Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.