Dreamboat Company Had the Following Information for the Year Ended

question 117

Essay

Dreamboat Company had the following information for the year ended December 31, 20X6, and at December 31, 20X5: $$\begin{array} { l l l } & \underline { 12 / 31 / 20 \times 6 } & \underline { 12 / 31 / 20 \times 5 } \\\text { Fixed ass ets } & \$ 186,000 & \$ 156,000 \\\text { Accumulated depreciation } & ( 62,000 ) & ( 54,000 )\end{array}$$ Depreciation expense for 20X6 was $18,000. Equipment which originally cost $20,000 with accumulated depreciation of $10,000 was sold at a $3,000 loss.
Required:
Determine how these events would appear on Dreamboat Company's statement of cash flows for the year ended December 31, 20X6, assuming that Dreamboat Company uses the direct method.

---

Definitions:

Sales Budget

An estimate of the expected sales revenue for a period, which serves as a foundation for a company's production and marketing planning.

Master Budget

An inclusive financial planning document that consolidates all individual budgets related to sales, cost of goods sold, operations, overheads, and capital expenditures.

Credit Sales

Sales made by a business where payment is delayed as per agreed terms with the buyer.

Cash Collections

The process of receiving cash payments from customers, typically for goods sold or services rendered.