GB 518 Unit 6 Assignment_Problem 12-04A_Gallery Corporation McCord Corporation Question and answer

Problem 16-5AB Statement of cash flows (direct method) L.O. P1, P3, P5
Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

GALLEY CORPORATION
Comparative Balance Sheets
December 31, 2011 and 2010
2011 2010
Assets
Cash $ 187,253 $ 125,874
Accounts receivable 99,868 86,913
Merchandise inventory 655,951 575,424
Equipment 358,617 320,679
Accum. depreciation—Equipment (166,825) (109,890)

Total assets $ 1,134,864 $ 999,000

Liabilities and Equity
Accounts payable $ 74,901 $ 103,896
Income taxes payable 29,506 25,974
Common stock, $2 par value 613,500 565,500
Paid-in capital in excess of par value, common stock 222,825 174,825
Retained earnings 194,132 128,805

Total liabilities and equity $ 1,134,864 $ 999,000

GALLEY CORPORATION
Income Statement
For Year Ended December 31, 2011
Sales $ 2,310,000
Cost of goods sold 1,062,600

Gross profit 1,247,400
Operating expenses
Depreciation expense $ 56,935
Other expenses 445,229 502,164

Income before taxes 745,236
Income taxes expense 145,321

Net income $ 599,915

Additional Information on Year 2011 Transactions
a.
Purchased equipment for $37,938 cash.
b.
Issued 24,000 shares of common stock for $4.00 cash per share.
c.
Declared and paid $534,588 in cash dividends.

Required:
Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

GALLEY CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2011
Cash flows from operating activities
$

Net cash operating activities $
Cash flows from investing activities

Cash flows from financing activities

Net cash financing activities

$
Cash balance at beginning of 2011

Cash balance at end of 2011 $

P12-4A)
P13-4A)

McCord Corporation financial statements ?

Selected year-end financial statements of McCord Corporation follow. (Note: All sales are on credit;
selected balance sheet amounts at December 31, 2004, were inventory, $32,400; total assets, $182,400;
common stock, $90,000; and retained earnings, $31,300.)
McCORD CORPORATION
Income Statement
For Year Ended December 31, 2005
Sales . . . . . . . . . . . . . . . . . . . $348,600
Cost of goods sold . . . . . . . . 229,150
Gross profit . . . . . . . . . . . . . 119,450
Operating expenses . . . . . . . . 52,500
Interest expense . . . . . . . . . . 3,100
Income before taxes . . . . . . . 63,850
Income taxes . . . . . . . . . . . . . 15,800
Net income . . . . . . . . . . . . . . $ 48,050
McCORD CORPORATION
Balance Sheet
December 31, 2005
Assets Liabilities and Equity
Cash . . . . . . . . . . . . . . . . . . . . . . $ 9,000 Accounts payable . . . . . . . . . . . . . . . . . . $ 16,500
Short-term investments . . . . . . . . . 7,400 Accrued wages payable . . . . . . . . . . . . . . 2,200
Accounts receivable, net . . . . . . . . 28,200 Income taxes payable . . . . . . . . . . . . . . . . 2,300
Notes receivable (trade)* . . . . . . . . 3,500 Long-term note payable, secured
Merchandise inventory . . . . . . . . . . 31,150 by mortgage on plant assets . . . . . . . . . 62,400
Prepaid expenses . . . . . . . . . . . . . . 1,650 Common stock, $1 par value . . . . . . . . . . 90,000
Plant assets, net . . . . . . . . . . . . . . . 152,300 Retained earnings . . . . . . . . . . . . . . . . . . 59,800
Total assets . . . . . . . . . . . . . . . . . . $233,200 Total liabilities and equity . . . . . . . . . . . . . $233,200

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GB 518 Unit 6 Assignment_Problem 12-04A_Gallery Corporation McCord Corporation A+ answer