The following combined income and retained earnings statement, along with selected balance sheet data, are provided for Roper Company:
|
Net sales revenue. |
$85,000 |
|
|
Other revenues. |
4,500* |
|
|
Total revenues. |
$89,500 |
|
|
Expenses: |
$51,000 |
|
|
Cost of goods sold. |
14,700 |
|
|
Selling and administrative expenses |
3,200 |
|
|
Depreciation expense |
1,400 |
|
|
Interest expense. |
70,300 |
|
|
Total expenses. |
$19,200 |
|
|
Income before taxes. |
5,760 |
|
|
Income taxes |
$13,440 |
|
|
Net income. |
33,500 |
|
|
Retained earnings, January 1, 2003 |
$46,940 |
|
|
Dividends declared and paid. |
2,500 |
|
|
Retained earnings, December 31, 2003 |
$44,440 |
|
|
Beginning of Year |
End of Year |
|
|
Accounts receivable (net) |
$10,500 |
$11,000 |
|
Inventory |
19,300 |
18,000 |
|
Prepaid expenses |
950 |
700 |
|
Accounts payable |
7,200 |
8,000 |
|
Interest payable |
1,500 |
1,000 |
|
Income taxes payable. |
500 |
2,500 |
Required
1.Using the indirect method, compute the net cash flows from operations for Roper Company for 2003.
2.Using the direct method, compute the net cash flows from operations for Roper Company for 2003.
3.What is the impact of dividends paid on net cash flows from operations? Explain.