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Problem 12-3 Statement of Cash Flows (Direct Method)

Peoria Corp. just completed another successful year, as indicated by the following income statement:

For the Year Ended

December 31, 2012

Sales revenue \$1,250,000

Cost of goods sold 700,000

Gross profit \$ 550,000

Operating expenses 150,000

Income before interest and taxes \$ 400,000

Interest expense 25,000

Income before taxes \$ 375,000

Income tax expense 150,000

Net income \$ 225,000

Presented here are comparative balance sheets:

December 31

2012 2011

Cash \$ 52,000 \$ 90,000

Accounts receivable 180,000 130,000

Inventory 230,000 200,000

Prepayments 15,000 25,000

Total current assets \$ 477,000 \$ 445,000

Land \$ 750,000 \$ 600,000

Plant and equipment 700,000 500,000

Accumulated depreciation (250,000) (200,000)

Total long-term assets \$1,200,000 \$ 900,000

Total assets \$1,677,000 \$1,345,000

Accounts payable \$ 130,000 \$ 148,000

Other accrued liabilities 68,000 63,000

Income taxes payable 90,000 110,000

Total current liabilities \$ 288,000 \$ 321,000

Long-term bank loan payable \$ 350,000 \$ 300,000

Common stock \$ 550,000 \$ 400,000

Retained earnings 489,000 324,000

Total stockholders equity \$1,039,000 \$ 724,000

Total liabilities and stockholders equity \$1,677,000 \$1,345,000

Other information is as follows:

a. Dividends of \$60,000 were declared and paid during the year.

b. Operating expenses include \$50,000 of depreciation.

c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

Required:

Prepare statement of cash flows for 2012 using direct method in the operating activities section

Problem 12-4 Statement of Cash Flows Indirect Method

Refer to all of the facts in Problem 12-3.

Required

Prepare a statement of cash flows for 2012 using the indirect method in the Operating Activities section.

NOTE: Tutorial answers for these 2 problems has NO MEMO, only statement of cash flows/solutions