Cardinal Company Uses the Indirect Method to Prepare Its Statement

question 98

Essay

Cardinal Company uses the indirect method to prepare its statement of cash flows.Using the following information,complete the worksheet for the year ended December 31,2016.
- Net Income for the year ended December 31,2016 was $49,000
- Depreciation expense for 2016 was $12,000
- During 2016,plant assets with a book value of $10,000 (cost $10,000 and accumulated depreciation $0)were sold for $14,000
- Plant assets were acquired for $52,000 cash
- Issued common stock for $28,000
- Issued long-term notes payable for $34,000
- Repaid long-term notes payable for $40,000
- Purchased treasury stock for 3,000
- Paid dividends of $10,000

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Definitions:

Income from Operations

The earnings generated from a business's core activities, excluding revenues and expenses from non-operational activities.

Perpetual Inventory System

An accounting method that continuously updates inventory records for each purchase and sale of inventory.

Cost of Merchandise Sold

The total cost incurred to purchase or manufacture the goods sold during a specific period.

FOB Shipping Point

A term used in shipping indicating that the buyer assumes responsibility for the goods and the cost of transportation once the goods leave the seller’s premises.