I need help on this: The Arctic Company's income statement and comparative balance sheets at December 31 of 2019 and 2018 are shown below: Sales revenue $645,000 Cost of goods sold $430,000 Wages expense 91,000 Insurance expense 12,000 Depreciation expense 13,000 Interest expense 15,000 Income tax expense 29,000 590,000 Net income 55,000 Balance sheet: Dec 31, 2019 Dec 31, 2018 Assets Cash $41,000 $8,000 Accounts receivable 41,000 32,000 Inventory 90,000 65,000 Prepaid insurance 5,000 7,000 Plant assets 219,000 202,000 Accumlated depreciation (68,000) (55,000) Total assests $328,000 $259,000 Liabilities and Stockholer's equitu Accounts payable 7,000 10,000 Wages payable 10,000 6,000 Income tax payable 6,000 7,000 Bonds payable 141,000 87,000 Common stock 90,000 90,000 Retained earnings 74,000 59,000 Total liabilities and stockholder's equity $328,000 $259,000 Cash dividends of $40,000 were declared and paid during 2019. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases. Required: a) Calculate the change in cash that occured during 2019 b) Prepare a statement of cash flows using the indirect method c) Computer free cash flow

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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I need help on this:

The Arctic Company's income statement and comparative balance sheets at December 31 of 2019 and 2018 are shown below:

Sales revenue		$645,000
Cost of goods sold	$430,000
Wages expense	91,000
Insurance expense	12,000
Depreciation expense	13,000
Interest expense	15,000
Income tax expense	29,000	590,000

Net income		55,000

Balance sheet:

	Dec 31, 2019	Dec 31, 2018
Assets
Cash	$41,000	$8,000
Accounts receivable	41,000	32,000
Inventory	90,000	65,000
Prepaid insurance	5,000	7,000
Plant assets	219,000	202,000
Accumlated depreciation	(68,000)	(55,000)
Total assests	$328,000	$259,000

Liabilities and Stockholer's equitu
Accounts payable	7,000	10,000
Wages payable	10,000	6,000
Income tax payable	6,000	7,000
Bonds payable	141,000	87,000
Common stock	90,000	90,000
Retained earnings	74,000	59,000
Total liabilities and stockholder's equity	$328,000	$259,000

Cash dividends of $40,000 were declared and paid during 2019. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases.

Required:

a) Calculate the change in cash that occured during 2019

b) Prepare a statement of cash flows using the indirect method

c) Computer free cash flow

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