PR 16-5A Statement of cash flows—direct method applied to PR 16-1A
The comparative balance sheet of Flack Inc. for December 31, 2013 and 2012, is as follows:
|
Dec. 31, 2013 |
Dec. 31, 2012 |
|
|
Assets |
||
|
Cash |
$234,660 |
$219,720 |
|
Accounts receivable (net) |
85,440 |
78,360 |
|
Inventories |
240,660 |
231,420 |
|
Investments |
0 |
90,000 |
|
Land |
123,000 |
0 |
|
Equipment |
264,420 |
207,420 |
|
Accumulated depreciation—equipment |
(62,400) |
(55,500) |
|
$885,780 |
$771,420 |
|
|
Liabilities and Stockholders’ Equity |
||
|
Accounts payable (merchandise creditors) |
$159,180 |
$151,860 |
|
Accrued expenses payable (operating expenses) |
15,840 |
19,740 |
|
Dividends payable |
9,000 |
7,200 |
|
Common stock, $1 par |
48,000 |
36,000 |
|
Paid-in capital in excess of par—common stock. |
180,000 |
105,000 |
|
Retained earnings |
473,760 |
451,620 |
|
$885,780 |
$771,420 |
The income statement for the year ended December 31, 2013, is as follows:
|
Sales |
$1,508,520 |
|
|
Cost of merchandise sold |
928,320 |
|
|
Gross profit |
$ 580,200 |
|
|
Operating expenses: |
||
|
Depreciation expense |
$ 6,900 |
|
|
Other operating expenses |
491,400 |
|
|
Total operating expenses |
498,300 |
|
|
Operating income |
$ 81,900 |
|
|
Other income: |
||
|
Gain on sale of investments |
15,000 |
|
|
Income before income tax |
$ 96,900 |
|
|
Income tax expense |
38,760 |
|
|
Net income |
$ 58,140 |
The following additional information was taken from the records:
a. The investments were sold for $105,000 cash.
b. Equipment and land were acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $36,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.