Question

The Extra Surplus Company's Balance Sheet for December 31, 2015 and the Income Statement for 2016 are shown below.


Extra Surplus Company Balance Sheet December 31, 2015
Assets
Cash $10,000
Accounts Receivable 5,000
Inventory 12,000
Property and Equipment, Net 20,000
$47,000
Liabilities and Stockholders; Equity
Accounts Payable $10,000
Note Payable, Long-Term 5,000
Common Stock 20,000
Retained Earnings 12,000
$47,000
Extra Surplus Company Income Statement For the Year Ended December 31, 2016
Sales $13,000
Cost of Goods Sold 3,000
Salaries and Wage Expense 3,000
Interest Expense 1,000
Other Expenses 500
Net Income $ 5,500

Additional data:

Sales were $13,000; $8,000 in cash was received from customers.

Bought new land for cash, $10,000.

Sold other land for its book value of $5,000.

Paid $1,000 principal on the long-term note payable and $1,000 in interest.

Issued new shares of stock for $10,000 cash.

Cash dividends of $1,000 were declared and paid to stockholders.

Paid $5,500 on accounts payable.

No inventory purchases were made; other expenses were incurred on account.

All wages were paid in cash.

Other expenses were on account.

Required:

Part a. Prepare a balance sheet at December 31, 2016.

Part b. Prepare the statement of cash flows using the direct method.

Answer

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