Problem 2 (11 Marks) TEXAS CORPORATION Comparative Statements of Financial Position December 31 2014 2013 Cash .

Problem 2 (11 Marks) TEXAS CORPORATION Comparative Statements of Financial Position December 31 2014 2013 Cash .................................................... $ 43,000 $ 24,000 Accounts receivable, net ......................... 35,000 38,000 Inventory ............................................. 114,000 82,000 Land .................................................... 120,000 190,000 Building ................................................ 200,000 200,000 Accumulated depreciation ....................... (50,000) (40,000) Equipment ............................................ 1,030,000 600,000 Accumulated depreciation ....................... (118,000) (94,000) ........................................................... $1,374,000 $1,000,000 Accounts payable (merchandise purchases only) $ 115,000 $ 100,000 Salaries payable .................................... 20,000 -0- 4% Bonds payable ................................. 300,000 -0- Common shares ..................................... 750,000 750,000 Retained earnings .................................. 189,000 150,000 ........................................................... $1,374,000 $1,000,000 TEXAS CORPORATION Income Statement For year ended December 31, 2014 Sales ..................................................... $ 1,075,000 Cost of goods sold ................................... 640,000 Depreciation expense ............................... 94,000 Salaries expense ..................................... 140,000 Rent expense.......................................... 72,000 Other operating expenses, including bond interest 14,000 Net loss on sale of assets ......................... 10,000 Income taxes expense ............................. 21,000 Net income ............................................. $ 84,000 Additional Data: 1. The bonds were sold at par on July 1, 2014. 2. Cash dividends were paid. 3. Land was sold for $80,000. 4. Old equipment was sold for $70,000. This equipment had cost $150,000 and had accumulated depreciation of $60,000 to date of sale. New equipment was purchased to replace it. Instructions Prepare statement of cash flows for calendar 2014, using the direct method