The comparative balance sheets, income statement and additional information of Bakewell Corp. are presented as follows.Balance Sheet as at 31 December: 20202019 $ $Assets Cash273,600181,950Accounts Receivable94,35088,850Inventory431,400482,200Prepaid Rent20,20018,200Equipment118,000126,000Accumulated Depreciation – Equipment(74,900)(93,000)Building235,000110,000Accumulated Depreciation – Building(66,700)(55,000)Total Assets1,030,950859,200 Liabilities and Stockholders’ Equity Liabilities Accounts Payable111,000123,450Unearned Revenue18,05011,250Notes Payable (long-term)182,500172,500Total Liabilities311,550307,200 Stockholders’ Equity Common Stock580,000550,000Retained Earnings174,40077,000Treasury Stock(35,000)(75,000)Total Stockholders’ Equity719,400552,000Total Liabilities and Stockholders’ Equity1,030,950859,200 Income StatementFor the Year Ended 31 December 2020 $Revenue882,000Cost of goods sold481,000Operating expenses215,200Gain on sale of equipment4,600Tax expense38,000Net income152,400Additional Informationa. Depreciation expenses in 2020 was $24,600.b. Bakewell purchased an equipment costing $34,000 by cash.c. An equipment with an original cost of $42,000 (its book value was $11,000) was sold for $15,600 cash.d. Paid $115,000 to settle a note payable.e. Signed a 10-year promissory note of $125,000 in exchange for building.f. Bakewell received cash for all new shares of common stock issued in 2020.g. Bakewell received cash for all shares of treasury stock reissued in 2020h. Dividends were declared and paid by cash. Instruction: Prepare the statement of cash flows for the year ended 31 December 2020, using the indirect method.

The cash flow statement represents the cash inflow and cash outflow due to the operating, financing,…

Answered: The comparative balance sheets, income…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 6MCQ

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Question

The comparative balance sheets, income statement and additional information of Bakewell Corp. are presented as follows.

Balance Sheet as at 31 December:

	2020	2019
	$	$
Assets
Cash	273,600	181,950
Accounts Receivable	94,350	88,850
Inventory	431,400	482,200
Prepaid Rent	20,200	18,200
Equipment	118,000	126,000
Accumulated Depreciation – Equipment	(74,900)	(93,000)
Building	235,000	110,000
Accumulated Depreciation – Building	(66,700)	(55,000)
Total Assets	1,030,950	859,200

Liabilities and Stockholders’ Equity
Liabilities
Accounts Payable	111,000	123,450
Unearned Revenue	18,050	11,250
Notes Payable (long-term)	182,500	172,500
Total Liabilities	311,550	307,200

Stockholders’ Equity
Common Stock	580,000	550,000
Retained Earnings	174,400	77,000
Treasury Stock	(35,000)	(75,000)
Total Stockholders’ Equity	719,400	552,000
Total Liabilities and Stockholders’ Equity	1,030,950	859,200

Income Statement

For the Year Ended 31 December 2020

	$
Revenue	882,000
Cost of goods sold	481,000
Operating expenses	215,200
Gain on sale of equipment	4,600
Tax expense	38,000
Net income	152,400

Additional Information

a. Depreciation expenses in 2020 was $24,600.

b. Bakewell purchased an equipment costing $34,000 by cash.

c. An equipment with an original cost of $42,000 (its book value was $11,000) was sold for $15,600 cash.

d. Paid $115,000 to settle a note payable.

e. Signed a 10-year promissory note of $125,000 in exchange for building.

f. Bakewell received cash for all new shares of common stock issued in 2020.

g. Bakewell received cash for all shares of treasury stock reissued in 2020

h. Dividends were declared and paid by cash.

Instruction:

Prepare the statement of cash flows for the year ended 31 December 2020, using the indirect method.

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