The Following Information Is Available for the

question 124

Essay

The following information is available for the


Aarons Corporation:
Aarons Corporation
Balance Sheets
At December 31

$$\begin{array} { | l | r | r } \hline & 20 \mathrm { X } 2 & 20 \mathrm { X } 1 \\\hline \text { Astets: } & & \\\hline \text { Cash } & \$ 24,640 & \$ 23,040 \\\hline \text { Accounts receivable } & 32,180 & 29,400 \\\hline \text { Merchandise inventory } & 73,125 & 61,710 \\\hline \text { Long-term investments } & 55,900 & 56,400 \\\hline \text { Equipment } & 175,500 & 145,500 \\\hline \text { Accumulated depreciation } & ( 33,550 & ( 31,200 \\& & \\\hline \text { Total assets } & \$ 327,795 & \$ 284,850 \\\hline & & \\\hline \text { Liabilities: } & & \\\hline \text { Accounts payable } & \$ 65,000 & \$ 40,380 \\\hline \text { Income taxes payable } & 10,725 & 10,200 \\\hline \text { Bonds payable } & 48,750 & 66,000 \\\hline \text { Total liabilities } & \$ 124,475 & \$ 116,580 \\\hline \text { Equity: } & & \\\hline \text { Common stock } & 117,000 & 96,000 \\\hline \text { Paid-in capital in excest of par } & 13,000 & 9,000 \\\hline \text { Retained earnings } & 73,320 & 63,270 \\\hline \text { Total equity } & \$ 203,320 & \$ 168,270 \\\hline \text { Total liabilities and equity } & \$ 327,795 & \$ 284,850 \\\hline & & \\\hline\end{array}$$

Aarons Corporation
Income Statement
For Year Ended December 31, 20X2



$$\begin{array} { | l | r | r |} \hline \text { Sales } & & \$ 240,000 \\\hline \text { Cost of goods sold } & \$ 80,900 & \\\hline \text { Depreciation expente } & 29,400 & \\\hline \text { Other operating expenses } & 48,000 & \\\hline \text { Interest expense } & 2,000 & ( 160,300 \\\hline \text { Other gains (lostes): } & & \\\hline \text { Lost on sale of equipment } & & ( 8,400 \\\hline \text { Income before taxes } & & 71,300 \\\hline \text { Income taxes expense } & & 27,650 \\\hline \text { Net income } & & \$ 43,650 \\\hline & &\end{array}$$

Additional information:
(1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.
(2) Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3) New equipment was purchased for $67,550 cash.
(4) Cash dividends of $33,600 were paid.
(5) Additional shares of stock were issued for cash.
Prepare a complete statement of cash flows for calendar-year 20X2 using the indirect method.

---

Definitions:

Product Line

A group of related products marketed by a company under a single brand name.

Cash Payments Journal

A financial journal that records all cash outlays or disbursements made by a company during a period.

Accounts Payable Subsidiary Ledger

A ledger containing all account details of amounts owed by a business to its suppliers or creditors, facilitating more detailed tracking alongside the general ledger.

Payment For Supplies

The monetary expenditure for obtaining supplies necessary for the operation of a business.