When forming a company, the options are sole proprietor, partnership, and corporation. Most choose corporation. Why is the corporate form seen to be best? What rights do the stockholders have?
When raising capital sometimes the decision is to sell stock. What are the pros and cons of selling stock? Is it better to sell common or preferred stock? Why?
Please attempt this exercise on cash flows.
E12-20A The income statement and additional data of Bolton Travel Products, Inc., follow:
Bolton Travel Products, Inc.
Year Ended December 31, 2012
Service revenue $237,000
Dividend revenue 8,700 $245,700
Cost of goods sold 100,000
Salary expense 59,000
Depreciation expense 28,000
Advertising expense 2,900
Interest expense 2,100
Income tax expense 14,000 206,000
Net income $39,700
a.Acquisition of plant assets was $130,000. Of this amount, $75,000 was paid in cash and $55,000 by signing a note payable.
b.Proceeds from sale of land totaled $25,000.
c. Proceeds from issuance of common stock totaled $50,000.
d.Payment of long-term note payable was $16,000.
e. Payment of dividends was $11,000.
f. From the balance sheets:
Cash $125,000 $50,800
Accounts receivable 41,000 57,000
Inventory 94,000 73,000
Prepaid expenses 9,200 8,700
Accounts payable $32,000 $18,000
Accrued liabilities 82,000 57,000
â–¸ Prepare the operating section of Boltonâ€™s statement of cash flows for the year ended December 31, 2012, using the indirect method.