The Income Statement and Comparative Balance Sheets for Sterling Company

question 82

Essay

The income statement and comparative balance sheets for Sterling Company are presented below:
Sterling Company
Income Statement
For the Year Ended Decamber 31, 2015
$\begin{array}{ll}\text { Sales }&&\$586,000\\\text { Cost of goods sold } & 311,000 \\\text { Depreciation expense } & 14,000 \\\text { Amortization expense } & 3,000 \\\text { Wage expense } & 88,000 \\\text { Rent expense } & 24,000 \\\text { Loss on sale of fixed assets } & 2,600 \\\text { Interest expense } & 4,900 \\\text { Income taxexpense } & 56,000\\\text { Total expenses }&503,500\\\text { Net income }&&\$82,500\end{array}$
$\begin{array}{lll}&\text { December 31, } 2014&\text { December 31, } 2015\\\text { Cash } & \$ 16,300 & \$ 19,900 \\\text { Accounts receivable } & 27,900 & 36,300 \\\text { Inventory } & 53,900 & 48,200 \\\text { Prepaid rent } & 1,800 & 2,000 \\\text { Land } & 22,000 & 32,000\\\text { Fixed assets } & 118,000 & 130,000 \\\text { Accumulated depreciation } & (39,000) & (46,000) \\\text { Patent } & \underline{11,000} & \underline{12,000}\\\text { Total assets }&\$211,900&\$234,400\\\text { Accounts payable } & 21,100 & 27,700 \\\text { Wages payable } & 5,700 & 6,200 \\\text { Interest payable } & 400 & 1,600 \\\text { Taxes payable } & 7,900 & 6,800 \\\text { Bonds payable, due } 2020 & 36,000 & 44,000 \\\text { Commonstock } & 32,000 & 35,000 \\\text { Retained earnings } & 108,800 & 113,100 \\\end{array}$
Total liabilities and
$\begin{array} { l } \text {Stockholders'equity }&\$211,900&\$234,400\\\end{array}$

Required:
Prepare a statement of cash flows using the indirect method for the year ended December 31,2015.No land was sold in 2015.Land was purchased using bonds payable for $8,000 and cash for $2,000.A fixed asset was sold in 2015 for $4,100.Purchases of fixed assets and patents were for cash.

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Definitions:

Single Example

A specific instance or case used to illustrate a general concept or principle.

Inductive Generalization

A method of reasoning in which conclusions are drawn about generalities from specific instances.

Distilled Spirits

Alcoholic beverages produced by distillation, which involves purifying a liquid by heating and cooling, from fermented grain, fruit, or vegetables.

Sick

A condition of being unwell either in body or mind.