accounting-P23-8 (SCF—Direct and Indirect Methods) Comparative balance sheet

Question:Problem 23-8 (Wiley PLUS)P23-8 (SCF—Direct and Indirect Methods) Comparative balance sheet accounts of Sharpe Company arepresented below.SHARPE COMPANYCOMPARATIVE BALANCE SHEET ACCOUNTSAS OF DECEMBER 31Debit Balances 2014 2013Cash $ 70,000 $ 51,000Accounts Receivable 155,000 130,000Inventory 75,000 61,000Investments (available-for-sale) 55,000 85,000Equipment 70,000 48,000Buildings 145,000 145,000Land 40,000 25,000Totals $610,000 $545,000Credit BalancesAllowance for Doubtful Accounts $ 10,000 $8,000Accumulated Depreciation—Equipment 21,00014,000Accumulated Depreciation—Buildings 37,00028,000Accounts Payable 66,00060,000Income Taxes Payable 12,000 10,000Long-Term Notes Payable 62,000 70,000Common Stock 310,000 260,000Retained Earnings 92,000 95,000Totals $610,000 $545,000Additional data:1. Equipment that cost $10,000 and was 60% depreciated was sold in 2014.2. Cash dividends were declared and paid during the year.3. Common stock was issued in exchange for land.4. Investments that cost $35,000 were sold during the year.5. There were no write-offs of uncollectible accounts during the year.Sharpe’s 2014 income statement is as follows.Sales revenue $950,000Less: Cost of goods sold 600,000Gross profi t 350,000Less: Operating expenses (includes depreciation expense and bad debt expense) 250,000Income from operations 100,000Other revenues and expensesGain on sale of investments $15,000Loss on sale of equipment (3,000) 12,000Income before taxes 112,000Income taxes 45,000Net income $ 67,000Instructions(a) Compute net cash provided by operating activities under the direct method.

 

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