Financial Accounting Final Exam

Spring 2015
Rod Jacobson

1. Keith just finished his first year operating and running Keiths bow ties
here in Vermont.
He knows that his company has been profitable and that there is cash
in the bank based on income prepared income statements and balance
sheets. He has, however, not prepared statements of cash flows
throughout the year. As such, Keith has provided you with the
following year-end income statement and balance sheet as follows:
Keiths Bow Ties
Income Statement
Year Ended April 30, 2015
Sales revenue
. $135,000
Cost of goods sold
72,000
Gross profit ..
63,000
Operating expenses:
Wages

18,000
Consulting
11,850
Insurance
.. 1,200
Utilities
.
2,400
Depreciation
. 3,250
Total operating expenses
36,700
Income from operations ..
26,300
Interest expense
..
900

Income before income tax

25,400
Income tax expense
.. 8,900
Net income
.. 16,500

Keiths Bow Ties

Balance Sheet
As of April 30, 2015
Assets:
Current assets
Cash

$12,300
Accounts
receivable
11,000
Inventory

16,000
Prepaid

Total
current

Insurance
1,000
assets
40,300

Equipment
.
17,500
Accumulated
.

depreciation
3,250

Total
assets
.
54,550
Liabilities:
Current liabilities
Accounts
.

Payable
$6,200

Unearned
revenue
1,250
Other
current
liabilities
.. 1,900
Total
current
liabilities
. 9,350
Notes
payable

15,000
Total
liabilities

24,350
Stockholders equity
Common
stock

500
Additional
paid-in
.

capital
9,500

Preferred
stock

5,000
Retained
Earnings
..
15,200
Total
stockholders
.
Total
liabilities
and
stockholders
54,550

equity
30,200
equity

Required:
Prepare a statement of cash flows for Keiths Bow Ties for the fiscal
year ending on April 30, 2015 using the indirect method. Since this is
Keiths first year of operations, the beginning balance sheet accounts
were zero.
Additional information:
There was no disposal of equipment during 2015
Dividends of $1,300 were paid for during the year with cash
Prepaid expenses are all related to operations.

NOTE: Your work must be in Excel with formulas