Breakwater Boats sells boating accessories. At the end of 2018, the income statement and comparative
Breakwater Boats sells boating accessories. At the end of 2018, the income statement and comparative balance sheet were prepared as shown below.
Breakwater Boats
Balance Sheet
As at December 31
Assets
2018
2017
Currents Assets
Cash
$73,870
$62,500
Accounts Receivable
94,800
87,500
Merchandise Inventory
327,000
245,700
Prepaid Expenses
14,500
14,500
Total Current Assets
510,170
410,200
Noncurrent Assets
Land
0
44,000
Equipment
340,000
340,000
Accumulated Depreciation
(26,200)
(24,500)
Total Noncurrent Assets
313,800
359,500
Total Assets
$823,970
$769,700
Liabilities
Current Labilities
Accounts Payable
$52,600
$45,700
Notes Payable, Current Portion
8,500
8,500
Total Current Liabilities
61,100
54,200
Notes Payable, Long Term Portion
50,100
58,600
Total Liabilities
111,200
112,800
Stockholders’ Equity
Common Stock
150,000
150,000
Retained Earnings
562,770
506,900
Total Stockholders’ Equity
712,270
656,900
Total Liabilities and Stockholders’ Equity
$823,970
$769,700
During 2018, land was sold for a gain of $6,000. There was no purchase of equipment throughout the year.
Breakwater Boats
Income Statement
For the Year Ended December 31, 2018
Sales
$562,200
Costs of Goods Sold
365,300
Gross Profit
196,700
Operating Expenses
Depreciation Expenses
1,700
Other Operating Expenses
61,200
Total Operating Expenses
62,900
Income for Operations
133,800
Other Income and Expenses
Gain on Sale of Land
6,000
Income before Income Tax Expense
139,800
Income Tax Expense
48,930
Net Income
90,870
a) Prepare the statement of cash flows using the indirect method.
