Question 1 Bridgeport Inc., a greeting card company, had the following statements prepared as of December 31, 2017. BRIDGEPORT INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 12/31/17 12/31/16 Cash $5,900 $6,900 Accounts receivable 61,400 51,200 Short-term debt investments (available-for-sale) 34,700 18,000 Inventory 40,200 59,700 5,000 4,100 Equipment 152,700 130,200 Accumulated depreciation— equipment (35,400 ) (25,000 ) 45,700 49,900 $310,200 $295,000 $46,300 $40,400 Income taxes payable 3,900 6,000 Salaries and wages payable 8,100 3,900 Short-term loans payable 8,100 10,100 Long-term loans payable 60,200 69,400 100,000 100,000 Contributed capital, common stock 30,000 30,000 Retained earnings 53,600 35,200 $310,200 $295,000 Prepaid rent Copyrights Total assets Accounts payable Common stock, $10 par Total liabilities & stockholders’ equity BRIDGEPORT INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 Sales revenue $335,075 Cost of goods sold 175,200 Gross profit 159,875 Operating expenses 120,100 Operating income Interest expense Gain on sale of equipment Income before tax 39,775 $11,400 2,000 9,400 30,375 Income tax expense 6,075 Net income $24,300 Additional information: 1. Dividends in the amount of $5,900 were declared and paid during 2017. 2. Depreciation expense and amortization expense are included in operating expenses. 3. No unrealized gains or losses have occurred on the investments during the year. 4. Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017. 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).) BRIDGEPORT INC. Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flow s from Operating Activities Cash Received from Customers $ Cash Payments to Suppliers $ Cash Payments for Operating Expenses Cash Payments for Interest Cash Payments for Income Taxes $
