Johnson Tires Company Uses the Indirect Method to Prepare the Statement

question 153

Essay

Johnson Tires Company uses the indirect method to prepare the statement of cash flows.Refer to the following comparative balance sheet for Johnson Tires Company and complete the third column to show the increases or decreases.
$\begin{array}{c} \text {Johnson Tires Company}\\ \text { Comparative Balance Sheet}\\ \text { December 31,2017 and 2016}\\\begin{array}{lll}&& & \text { Increase/ } \\&2016&2015&\text { (Decrease }\\\text { Cash } & \$ 39,600 & \$ 19,800 \\\text { Accounts Receivable } & 26,400 & 38,500 \\\text { Merchandise Inventory } & \underline{204,000} & \underline{126,500} \\\text { Total Assets } & \underline{270,000} & \underline{184,800}\end{array}\end{array}$ $$\begin{array} { l l l } \text { Accounts Payable } & 4,000 & 6,600 \\\text { Accrued Liabilities } & 2,400 & 1,100 \\\text { Long-term Notes Payable } & \underline { 100,000 } & \underline { 99,000 } \\\text { Total Liabilities } & \underline { 108,000 } & \underline { 106,700 }\end{array}$$ $$\begin{array} { l l l } \text { Common Stcok } & 36,000 & 2,200 \\\text { Retained Earnings } & 135,600 & 81 , 4 0 0 \\\text { Treasury Stock } & \underline { ( 9,600 ) } & \underline { ( 5,500 ) } \\\text { Total Stockholders' Equity } & \underline { 162,000 } & \underline { 7,100 }\end{array}$$ $\text { Total Liabilities and Stockholders' Equity } \quad \underline{\$ 270,000} \quad \underline{\$ 184.800}$

---

Definitions:

Social Inequality

A condition in which members of society have differing amounts of wealth, prestige, or power.

Strive

To make great efforts to achieve or obtain a particular goal, often in the face of difficulties.

Striving For Superiority

A concept in Adlerian psychology that suggests an individual's motivation to achieve personal excellence and superiority in areas important to them.

Fundamental Fact

A basic, incontrovertible truth or principle that serves as the foundation for further knowledge or understanding.