CF Unit6 P12-5 XS Supply Company

P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) LO12-2, 12-4, 12-6

CF Unit6 P12-5 XS Supply Company

XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

2014 2013

Balance sheet at December 31

Cash $34,000 $29,000

Accounts receivable 35,000 28,000

Merchandise inventory 41,000 38,000

Property and equipment 121,000 100,000

Less: Accumulated depreciation (30,000) (25,000)

$201,000 $170,000

Accounts payable $36,000 $ 27,000

Wages payable 1,200 1,400

Note payable, long-term 38,000 44,000

Contributed capital 88,600 72,600

Retained earnings 37,200 25,000

$ 201,000 $ 170,000

Income statement for 2014

Sales $ 120,000

Gain on sale of equipment 1,000

Cost of goods sold 70,000

Other expenses 38,800

Net income $ 12,200

Additional Data:

a. Bought equipment for cash, $31,000. Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash.

b. Paid $6,000 on the long-term note payable.

c. Issued new shares of stock for $16,000 cash.

d. No dividends were declared or paid.

e. Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800.

f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

Required:

1 Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method.

(List cash outflows as negative amounts.)

Possible input areas are shaded.

XS SUPPLY COMPANY

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net cash provided by operating activities -

Cash flows from investing activities:

Cash flows from financing activities: -$ -