PR 16-5B Statement of cash flows—direct method applied to PR 16-1B

The comparative balance sheet of Juras Equipment Co. for Dec. 31, 2013 and 2012, is:

Dec. 31, 2013

Dec. 31, 2012

Assets

Cash

$ 99,840

$ 67,680

Accounts receivable (net)

292,560

265,680

Inventories

421,440

409,200

Investments

0

144,000

Land

417,600

0

Equipment

619,200

505,440

Accumulated depreciation

(139,920)

(119,040)

$1,710,720

$1,272,960

Liabilities and Stockholders’ Equity

Accounts payable (merchandise creditors)

$ 290,400

$ 274,080

Accrued expenses payable (operating expenses)

43,200

37,920

Dividends payable

36,000

28,800

Common stock, $1 par

162,000

144,000

Paid-in capital in excess of par—common stock

594,000

288,000

Retained earnings

585,120

500,160

$1,710,720

$1,272,960

The income statement for the year ended December 31, 2013, is as follows:

Sales

$3,246,048

Cost of merchandise sold

1,997,568

Gross profit

$1,248,480

Operating expenses:

Depreciation expense

$ 20,880

Other operating expenses

831,600

Total operating expenses

852,480

Operating income

$ 396,000

Other expenses:

Loss on sale of investments

(14,400)

Income before income tax

$ 381,600

Income tax expense

152,640

Net income

$ 228,960

The following additional information was taken from the records:

a. Equipment and land were acquired for cash.

b. There were no disposals of equipment during the year.

c. The investments were sold for $129,600 cash.

d. The common stock was issued for cash.

e. There was a $144,000 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.