hesselbaum retail corporation s most recent income statement and comparative balance 641413

Hesselbaum Retail Corporation”s most recent Income Statement and comparative Balance Sheet is as follows:

Hesselbaum Retail Corporation

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Income Statement

 

For the Year Ended December 31, Year 2

 

Sales

$118,000

Less cost of goods sold

56,000

Gross margin

62,000

 

37,000

Net operating income

25,000

Less loss on sale of equipment

2,000

Income before taxes

23,000

Less income taxes

9,000

Net income

$ 14,000

 

Hesselbaum Retail Corporation

Comparative Balance Sheet

At December 31, Year 2, and Year 1

 

Year 2

Year 1

Assets

 

 

Cash

$12,000

$ 4,000

Accounts receivable, net

29,000

7,000

Merchandise inventory

36,000

21,000

Prepaid expenses

6,000

8,000

Equipment

72,000

88,000

Accumulated depreciation

(60,000)

(57,000)

Total assets

$95,000

$71,000

Liabilities and stockholders’ equity

 

 

Accounts payable

$17,000

$ 9,000

Wages payable

6,000

1,000

Taxes payable

2,000

3,000

Common stock

50,000

42,000

Retained earnings

20,000

16,000

Total liabilities and stockholders’ equity

$95,000

$71,000

No direct exchange transactions occurred at Hesselbaum during Year 2. No equipment was purchased during Year 2. The accumulated depreciation on the equipment soldwas $9,000. Cash dividends of $10,000 were declared and paid during Year 2. Hesselbaum uses the direct method to prepare its statement of cash flows.

Required:

Prepare Hesselbaum”s operating activities section of its Year 2 statement of cash flows.

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