The Management Team of Wickersham Brothers Inc

question 113

Essay

The management team of Wickersham Brothers Inc.is preparing its annual financial statements.The statements are complete except for the statement of cash flows.The completed comparative balance sheets and income statements are summarized.

Other information from the company's records includes the following:
-Bought equipment for cash,$50,000.
-Paid $10,000 on long-term note payable.
-Issued new shares of common stock for $20,000 cash.
-Cash dividends of $16,000 were declared and paid to stockholders.
-Accounts Payable arose from inventory purchases on credit.
-Income Tax Expense ($4,000)and Interest Expense ($3,000)were paid in full at the end of both years and are included in Other Expenses.
Required:
Part a.Prepare the statement of cash flows using the indirect method.Include any supplemental disclosures.
Part b.Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

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Definitions:

Goal

A desired result or outcome that a person or organization envisions, plans, and commits to achieve.

Simple Interest

Interest calculated only on the principal amount, without compounding.

Account

A record or statement that details financial transactions and their impact on an entity's financial position.

Guaranteed Annual Rate

The minimum annual return promised to an investor by an investment product, regardless of market conditions.