Question: BG Wholesalers is developing its annual financial
BG Wholesalers is developing its annual financial statements at December 31, 2013. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:
Additional Data:
a. Bought equipment for cash, $21,000.
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, $5,000; wages, $20,000; taxes, $6,000; other, $6,800.
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, 2013, using the indirect method.
2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash during 2013.
Transcribed Image Text:
2013 2012 Balance sheet at December 31 $ 37,000 32,000 41,000 $ 29,000 28,000 38,000 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation 132,000 111,000 (41,000) (36,000) $201,000 $170,000 $ 36,000 Accounts payable Accrued wage expense Note payable, long-term Contributed capital Retained earnings 1,200 38,000 88,600 $ 27,000 1,400 44,000 72,600 37,200 25,000 $201,000 $170,000 Income statement for 2013 Sales Cost of goods sold Other expenses $120,000 70,000 37,800 Net income $ 12,200
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