Diaz Company Had the Following Comparative Balance Sheet Information for 2014

question 64

Essay

Diaz Company had the following comparative balance sheet information for 2014 and 2013at the end of Year 2 and Year 1: $\begin{array}{l}\hline \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text {Diaz Company } \\\hline \quad\quad\quad\quad\quad\quad\quad\text { Comparative Balance Sheets } \\\begin{array}{|ll}\hline \\\hline \\\hline \text { Cash}\\\hline \text {Accounts receivable}\\\hline \text {Inventory}\\\hline \text {Prepaid insurance}\\\hline \text {Property, plant and equipment}\\\hline \text {Accumulated depreciation}\\\hline \text {Total}\\\hline \\\hline \text {Accounts payable}\\\hline \text {Bonds payable}\\\hline \text {Common stock}\\\hline \text {Retained earnings}\\\hline \text {Total}\\\hline\end{array}\begin{array}{|l|}\hline 2014 \\\hline \\\hline 30,000 \\\hline 48,000 \\\hline 158,000 \\\hline 10,000 \\\hline 70,000 \\\hline\underline { (14,000)} \\\hline \underline { 302,000} \\\hline \\\hline 14,000 \\\hline 90,000 \\\hline 140,000 \\\hline \underline { 58,000 }\\\hline \underline { 302,000} \\\hline\end{array}\begin{array}{l|}\hline 2013 \\\hline \\\hline 28,000 \\\hline 50,000 \\\hline 156,000 \\\hline 8,000 \\\hline 60,000 \\\hline \underline { (10,000)} \\\hline \underline { 292,000 }\\\hline \\\hline 18,000 \\\hline 120,000 \\\hline 120,000 \\\hline \underline { 34,000} \\\hline \underline { 292,000} \\\hline \end{array}\end{array}$ Diaz reported net income for 2014Year 2 of $40,000.No There were no sales or disposals of property,plant,and& equipment was disposed of during the year.Diaz uses the indirect method to prepare the statement of cash flows.

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Definitions:

Voucher System

A financial control mechanism in accounting where vouchers are created for each transaction, and supporting documents are required for authorization before payment.

Bank Statement

A summary of financial transactions which have occurred over a given period on a bank account held by a person or business with a financial institution.

Deposits

Funds placed into a bank account or with some other entity for safekeeping, which can include money put in savings or checking accounts.

Electronic Funds Transfers

The electronic transfer of money between accounts by consumer electronic systems rather than the exchange of cash, checks, or other paper documents.