Salaries PayableAn example for statement of cash flowsAccounting 2610 – Spring 2008Class 25The following are comparative balance sheets of Later Gator Lounge as of the end of 2003 and 2004:Later Gator LoungeComparative Balance SheetsDec. 31, 2003 Dec. 31, 2004AssetsDifferenceAssets: Cash $12,800 $17,450 Marketable Securities 20,000 20,000 Accounts Receivable 15,000 17,500 +2500 Inventory 15,000 12,000 -3000 Interest Receivable 125 175 +50Property & Equipment - at cost 25,000 27,500 Less Accumulated depreciation (11,250) (14,000)Total Assets $76,675 $80,625Liabilities and Equity Accounts payable - trade $7,800 $7,500 -300 Salaries Payable 8,000 8,500 +500 Rent Payable 500 250 -250Total Liabilities 16,300 16,250Common Stock 25,000 25,000Retained Earnings 35,375 39,375Total Liabilities and Stockholders' Equity $76,675 $80,625Later Gator LoungeIncome StatementFor year ended December 31, 2004Sales $74,500 Interest Revenue 1,500$76,000Expenses Cost of Goods Sold 25,000 Wages and Salaries Expense 30,500 Rent Expense 8,750 Depreciation Expense 2,750 Total (67,000)Net Income $9,000T-AccountsAccounts Receivable Interest Receivable Rent Payable15,000 125 50025017,500 175Accounts payable Inventory Salaries Payable7,800 15,000 8,0007,500 12,000 8,500Later Gator LoungeStatement of cash flows – Direct MethodFor year ended December 31, 2004Cash Flows from Operating ActivitiesCash received from customers 72,000Cash received from interest 1,450Cash paid to suppliers (22,300)Cash paid to employees as wages (30,000)Cash paid for rent (9,000) Net Cash Flows from Operating Activities 12,150Cash Flows from Investing ActivitiesPurchase of equipment (2,500) Net Cash Flows from Investing Activities (2,500)Cash Flows from Financing ActivitiesDividend paid (5,000) Net Cash Flows from Financing Activities (5,000)Net change in cash for the year 4,650Beginning cash balance 12,800Ending cash balance 17,450Later Gator LoungeStatement of cash flows – Indirect MethodFor year ended December 31, 2004Cash Flows from Operating ActivitiesNet income 9,000Adjustments:Increase in accounts receivable (2,500)Increase in interest receivable (50)Decrease in inventory 3,000Decrease in accounts payable (300)Increase in salaries payable 500Decrease in rent payable (250)Depreciation 2,750 Net Cash Flows from Operating Activities
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