2) Presented below are the comparative December 31 financial statements for Wu Industries, Inc.
Prepare a statement of cash flows for December 31, Year 2 using the indirect method.
Wu Industries, Inc
Balance Sheets
At December 31, Year 2 and Year 1
Year 2 Year 1
Cash $96,719 $28,694
Accounts Receivable 100,000 85,313
Inventory 206,250 181,250
Prepaid Insurance 1,875 2,500
Land, Buildings, and Equipment 1,562,500 1,406,250
Accumulated Depreciation (762,500) (715,000)
Investments 19,375 106,250
Total Assets $1,224,219 $1,095,256
Accounts Payable $95,425 $185,838
Salaries Payable 25,000 30,625
Notes Payable 31,250 93,750
Bonds Payable 250,000 -
Common Stock 375,000 375,000
Retained Earnings 447,544 410,044
$1,224,219 $1,095,256
Additional information for Year 2
(1) Sold available for sale securities costing $86,875 for $92,500.
(2) Equipment costing $25,000 with a book value of $6,250 was sold for $7,500.
(3) Issued 8% bonds at face value for $250,000.
(4) Purchased new equipment for $181,250 and paid cash.
(5) Paid cash dividends of $25,000.
(6) Net income was $62,500.
