Financial information for Flagstone Inc.'s balance sheet for fiscal 2018 and 2017 follows:
Additional information:
1.Preferred shares were converted to common shares during the year at their book value.
2.Bonds payable - the coupon rate on the bonds is 6% per year,payable on June 30 and December 31.Flagstone sold the $500,000 three year bonds on January 1,2017,for $486,679.
3.There was a common stock dividend valued at $20,000 and cash dividends were also paid.
4.Income tax expense was $57,000.
5.Flagstone arranged for a $500,000 bank loan to finance the purchase of the equipment in 2018.Interest paid and interest expense due to the bank loan were $60,566 in 2018.
6.Flagstone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities,respectively.
7.Investments - both investments were made on the last day of the year.The held-for-trading investments are reported as operating activity.
8.Sales = 1,900,000; cost of goods sold = 450,000; and,sales and administration expenses = 980,000 (includes depreciation expense).
Required:
a.Determine the 2018 year-end balance of the bonds payable,interest expense,and interest paid.
b.Prepare Flagstone's income statement for 2018.
c.Prepare a statement of cash flows for the year ended December 31,2018 using the indirect method.

Question

Financial information for Flagstone Inc.'s balance sheet for fiscal 2018 and 2017 follows:
  Additional information:
1.Preferred shares were converted to common shares during the year at their book value.
2.Bonds payable - the coupon rate on the bonds is 6% per year,payable on June 30 and December 31.Flagstone sold the $500,000 three year bonds on January 1,2017,for $486,679.
3.There was a common stock dividend valued at $20,000 and cash dividends were also paid.
4.Income tax expense was $57,000.
5.Flagstone arranged for a $500,000 bank loan to finance the purchase of the equipment in 2018.Interest paid and interest expense due to the bank loan were $60,566 in 2018.
6.Flagstone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities,respectively.
7.Investments - both investments were made on the last day of the year.The held-for-trading investments are reported as operating activity.
8.Sales = 1,900,000; cost of goods sold = 450,000; and,sales and administration expenses = 980,000 (includes depreciation expense).
Required:
a.Determine the 2018 year-end balance of the bonds payable,interest expense,and interest paid.
b.Prepare Flagstone's income statement for 2018.
c.Prepare a statement of cash flows for the year ended December 31,2018 using the indirect method.

Quizplus · Accepted Answer

The Answer of Financial information for Flagstone Inc.'s balance sheet for fiscal 2018 and 2017 follows:
  Additional information:
1.Preferred shares were converted to common shares during the year at their book value.
2.Bonds payable - the coupon rate on the bonds is 6% per year,payable on June 30 and December 31.Flagstone sold the $500,000 three year bonds on January 1,2017,for $486,679.
3.There was a common stock dividend valued at $20,000 and cash dividends were also paid.
4.Income tax expense was $57,000.
5.Flagstone arranged for a $500,000 bank loan to finance the purchase of the equipment in 2018.Interest paid and interest expense due to the bank loan were $60,566 in 2018.
6.Flagstone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities,respectively.
7.Investments - both investments were made on the last day of the year.The held-for-trading investments are reported as operating activity.
8.Sales = 1,900,000; cost of goods sold = 450,000; and,sales and administration expenses = 980,000 (includes depreciation expense).
Required:
a.Determine the 2018 year-end balance of the bonds payable,interest expense,and interest paid.
b.Prepare Flagstone's income statement for 2018.
c.Prepare a statement of cash flows for the year ended December 31,2018 using the indirect method.

Financial Information for Flagstone Inc