Accounting-Comprehensive Problem 4: Part 4

Comprehensive Problem 4: Part 4Bailey’s Chocolates has provided statements of retained earnings, income statements, and balancesheets for the months of January and February 2012. The company wants you to calculate the cashflow from operating activities for the period ending February 2012 using the indirect method.Using the Indirect Method produce a Cash Flow from Operating Activities.Cash Flows from Operating Activities (Indirect Method)Net Cash Flow from Operating ActivitiesBailey’s ChocolatesBailey’s ChocolatesIncome StatementMonth Ending January 31, 2012Income StatementMonth Ending February 29, 2012RevenueCost of Good SoldGross MarginExpensesSalary ExpenseSupplies ExpenseOffice Equipment ExpenseRent ExpenseInsurance ExpenseInterest Expense-NoteInterest Expense-MortgageDepreciation Expense-BuildingDepreciation Expense-EquipmentTotal ExpensesNet Income$20,000(5,000)RevenueCost of Good SoldGross MarginExpensesSalary ExpenseSupplies ExpenseOffice Equipment ExpenseRent ExpenseInsurance ExpenseInterest Expense-NoteInterest Expense-MortgageDepreciation Expense-BuildingDepreciation Expense-EquipmentTotal ExpensesNet Income$15,000900202001,0001001001,0001,500250$5,070$9,930$23,000(7,000)Retained earnings, January 1, 2012Net Gain, January 31, 2012$16,0001,000302251,0001001001,0001,500250Less WithdrawalsIncrease in Retained EarningsRetained earnings, January 31, 2012Bailey’s ChocolatesCurrent AssetsCash$85,260Accounts receivable10,600Inventory3,220Supplies150Prepaid Office Equipment 150Prepaid Rent1,500Security Deposit1,500Prepaid Insurance400$102,780T otal Current AssetsProperty, Plant & Equipment498,500T otal PP & E8,750$507,250T otal Assets$610,030Current LiabilitiesAccounts PayableSalary PayableT otal Current LiabAssetsLong-Term LiabilitiesNotes PayableInt Pay-NoteMortgage PayableInt Pay-MortT otal LT Liabilities$48,000400480,0002,000$530,400Total Liabilities$534,100Shareholder’s EquityCommon Stock$6,000APIC-Common60,000Retained Earnings9,930$75,930T otal EquityT otal Liab & Equity$610,030Cash$90,000Accounts receivable10,875Inventory2,750Supplies120Prepaid Office Equipment 100Prepaid Rent500Security Deposit1,500Prepaid Insurance300$106,145T otal Current AssetsProperty, Plant & EquipmentBuilding500,000Acc Dep-Building(3,000)Equipment 9,000Acc Dep-Equipment(500)Less Withdrawals (Dividends)Increase in Retained EarningsRetained earnings, February 29, 2012LiabilitiesCurrent Assets$3,500200$3,700497,000T otal PP & E8,500$505,500T otal Assets1,645$9,930$9,930Retained earnings, February 1, 2012Net Gain, February 1, 2012Bailey’s ChocolatesLiabilities-Bailey’s ChocolatesBalance SheetMonth Ending February 29, 2012Assets$$9,930Statement of Retained EarningsMonth Ending February 29, 2012$5,205$10,795Balance SheetMonth Ending January 31, 2012Building500,000Acc Dep-Building(1,500)Equipment 9,000Acc Dep-Equipment(250)Bailey’s ChocolatesStatement of Retained EarningsMonth Ending January 31, 2012Current LiabilitiesAccounts PayableSalary PayableT otal Current Liab$3,200150$3,350Long-Term LiabilitiesNotes PayableInt Pay-NoteMortgage PayableInt Pay-MortT otal LT Liabilities$48,000500480,0003,000$531,500Total Liabilities$534,850Shareholder’s EquityCommon Stock$6,000APIC-Common60,000Retained Earnings10,795$76,795T otal EquityT otal Liab & Equity$611,645$9,930$10,795$20,725$(9,930)$10,795$10,795

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