ACCOUNTING-Ozark Corporation reported net income of $100,000 for 20X5.

by | Aug 20, 2025 | Business

Ozark Corporation reported net income of $100,000 for 20X5. The income statement revealed sales of
$1,000,000; gross profit of $520,000; selling and administrative costs of
$340,000; interest expense of $20,000; and income taxes of $60,000.

The selling and administrative expenses included $25,000 for
depreciation. No equipment was sold
during the year. Equipment purchases were made with cash. Prepaid insurance included in the balance
sheet related to administrative costs.
All accounts payable included in the balance sheet relate to inventory
purchases. The change in retained
earnings is attributable to net income and dividends. The increase in common stock and additional
paid-in capital is due to issuing additional shares for cash.
Using the indirect approach, prepare a statement of cash flows
for Ozark for the year ending December 31, 20X5. Comparative balance sheets for Ozark
follow.
OZARK CORPORATION
Balance Sheet
December 31, 20X4 and 20X5
Assets 20X5 20X4
Cash $ 458,700 $ 471,450
Accounts
receivable		 199,250 171,500
Inventories 248,600 278,800
Prepaid insurance 13,000 11,000
Land 250,000 250,000
Building and
equipment		 1,500,000 1,300,000
Less: Accumulated
depreciation		 (205,000) (180,000)
Total assets $ 2,464,550 $ 2,302,750
Liabilities
Accounts payable $ 85,700 $ 93,400
Interest payable 10,500 15,000
Income taxes
payable		 22,000 8,000
Stockholders’
equity
Common stock 710,000 700,000
Paid in capital in
excess of par		 990,000 900,000
Retained earnings 646,350 586,350
Total liabilities and
equity		 $ 2,464,550 $ 2,302,750

OZARK CORPORATION
Statement of Cash Flows (Indirect Approach)
For the Year Ending December 31, 20X5
Cash flows
from operating activities:
Net income $ –
Add (deduct) noncash
effects on operating income
Depreciation
expense 		$ –
Increase in accounts
receivable 		–
Decrease in
inventory 		–
Increase in prepaid
insurance		 –
Decrease in accounts
payable		 –
Decrease in interest
payble		 –
Increase in income
taxes payable		 – –
Net cash provided by
operating activities 		$ –
Cash flows
from investing activities:
Purchase of
equipment		 $ –
Net cash used by
investing activities		 –
Cash flows
from financing activities:
Proceeds from issuing
stock		 $ –
Dividends on
common		 –
Net cash provided by
financing activities		 –
Net decrease
in cash		 $ –
Cash balance
at January 1, 20X5		 –
Cash balance
at December 31, 20X5		 $ –
OZARK CORPORATION
Statement of Cash Flows (Indirect Approach)
For the Year Ending December 31, 20X5
Cash flows
from operating activities:
Net income $ –
Add (deduct) noncash
effects on operating income
Depreciation
expense 		$ –
Increase in accounts
receivable 		–
Decrease in
inventory 		–
Increase in prepaid
insurance		 –
Decrease in accounts
payable		 –
Decrease in interest
payble		 –
Increase in income
taxes payable		 – –
Net cash provided by
operating activities 		$ –
Cash flows
from investing activities:
Purchase of
equipment		 $ –
Net cash used by
investing activities		 –
Cash flows
from financing activities:
Proceeds from issuing
stock		 $ –
Dividends on
common		 –
Net cash provided by
financing activities		 –
Net decrease
in cash		 $ –
Cash balance
at January 1, 20X5		 –
Cash balance
at December 31, 20X5		 $ –

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