Problem - Presented below is the comparative trial balance and additional information for The IT Crowd Ince. Credit balances are shown in brackets.
2006 2005
cash $ 10,000 $(5,000)
accounts receivalbe 24,000 21,000
inventory 5,000 7,000
prepaid expenses 1,000 500
equipment 42,000 35,000
accumulated amortization (10,000) (7,000)
accounts payable (17,000) (10,000)
salaries payable (3,000) 0
income taxes payable (1,000) 0
note payable (10,000) (12,000)
common shares (5,000) (4,000)
retained earnings (24,500) (14,900)
dividends 5,000 5,000
revenue (177,000) (145,000)
purchases 56,000 43,000
salaries expense 69,000 55,000
operating expenses 31,000 29,000
interest expense 500 600
income tax expense 3,000 2,800
gain on disposal of equipment 1,000 0
Additional information:
1. New equipment costing $8,000 was purchased for cash in 2006
2. Old equipment costing $3,000 was sold for $2,000 cash when the book value was $1,000
3. A cash dividend of $5,000 was paid during the year.
4. Accounts payalbe pertain to merchandise purchases.
Required: Prepare a cash flow statement using the indirect method.