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Question 26 Monty Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: MONTY Inc. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Total assets Accounts payable $46,500 $37,000 3,500 Income tax payable 6,700 Long-term loans payable 61,500 70,000 Common shares Retained earnings 130,250 130,250 41,450 45,950 Total liabilities and shareholders' equity $283,200 $289,900 MONTY Inc. Income Statement Sales revenue Year Ending December 31, 2020 Cost of goods sold Gross margin 2020 2019 $60,750 $53,600 58,000 50,200 40,500 72,500 5,700 4,000 Operating expenses Operating income Interest expense $11,200 Gain on disposal of equipment (2,200) 151,000 132,500 (32,750) (22,900) $283,200 $289,900 Income before income tax Income tax expense Net income $368,000 210,000 158,000 121,500 36,500 9,000 27,500 20,200 $7,300 Additional information: 1. Dividends on common shares in the amount of $11,800 were declared and paid during 2020. 2. Depreciation expense of $24,200 is included in operating expenses. 3. Equipment with a cost of $20,500 that was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Question 26 Monty Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: MONTY Inc. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Total assets Accounts payable $46,500 $37,000 3,500 Income tax payable 6,700 Long-term loans payable 61,500 70,000 Common shares Retained earnings 130,250 130,250 41,450 45,950 Total liabilities and shareholders' equity $283,200 $289,900 MONTY Inc. Income Statement Sales revenue Year Ending December 31, 2020 Cost of goods sold Gross margin 2020 2019 $60,750 $53,600 58,000 50,200 40,500 72,500 5,700 4,000 Operating expenses Operating income Interest expense $11,200 Gain on disposal of equipment (2,200) 151,000 132,500 (32,750) (22,900) $283,200 $289,900 Income before income tax Income tax expense Net income $368,000 210,000 158,000 121,500 36,500 9,000 27,500 20,200 $7,300 Additional information: 1. Dividends on common shares in the amount of $11,800 were declared and paid during 2020. 2. Depreciation expense of $24,200 is included in operating expenses. 3. Equipment with a cost of $20,500 that was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 74E
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Question 26 Monty Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: MONTY Inc. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Total assets Accounts payable Income tax payable. Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity MONTY Inc. Income Statement Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense $11,200 Gain on disposal of equipment (2,200) Income before income tax Income tax expense Net income 2019 2020 $60,750 $53,600 58,000 50,200 40,500 72,500 5,700 4,000 Year Ending December 31, 2020 Additional information: 151,000 132,500 (32,750) (22,900) $283,200 $289,900 $46,500 $37,000 3,500 6,700 61,500 70,000 130,250 130,250 41,450 45,950 $283,200 $289,900 $368,000 210,000 158,000 121,500 36,500 9,000 27,500 20,200 $7,300 1. Dividends on common shares in the amount of $11,800 were declared and paid during 2020. 2. Depreciation expense of $24,200 is included in operating expenses. 3. Equipment with a cost of $20,500 that was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Transcribed Image Text:Question 26 Monty Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: MONTY Inc. Comparative Statement of Financial Position December 31 Cash Accounts receivable Inventory Prepaid rent Equipment Accumulated depreciation-equipment Total assets Accounts payable Income tax payable. Long-term loans payable Common shares Retained earnings Total liabilities and shareholders' equity MONTY Inc. Income Statement Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense $11,200 Gain on disposal of equipment (2,200) Income before income tax Income tax expense Net income 2019 2020 $60,750 $53,600 58,000 50,200 40,500 72,500 5,700 4,000 Year Ending December 31, 2020 Additional information: 151,000 132,500 (32,750) (22,900) $283,200 $289,900 $46,500 $37,000 3,500 6,700 61,500 70,000 130,250 130,250 41,450 45,950 $283,200 $289,900 $368,000 210,000 158,000 121,500 36,500 9,000 27,500 20,200 $7,300 1. Dividends on common shares in the amount of $11,800 were declared and paid during 2020. 2. Depreciation expense of $24,200 is included in operating expenses. 3. Equipment with a cost of $20,500 that was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).) MONTY Inc. Statement of Cash Flows (Direct Method) C • # Adjustments to reconcile net income to net cash provided by operating activities: • # • • • • • • Prepare a statement cash flows using the indirect method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).) MONTY CORPORATION Statement of Cash Flows (Indirect Method) • • • • # O # • • # • • • # • # • • • • • : • # • : $
Transcribed Image Text:Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).) MONTY Inc. Statement of Cash Flows (Direct Method) C • # Adjustments to reconcile net income to net cash provided by operating activities: • # • • • • • • Prepare a statement cash flows using the indirect method. (Show amounts that decrease cash flow with either a sign e.g. -15,000 or in parenthesis e.g. (15,000).) MONTY CORPORATION Statement of Cash Flows (Indirect Method) • • • • # O # • • # • • • # • # • • • • • : • # • : $
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