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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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