Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company%u2019s balance sheets and income statement follow.
| GALLEY CORPORATION Comparative Balance Sheets December 31, 2011 and 2010 |
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| 2011 | 2010 | ||||
| Assets | |||||
| Cash | $ | 181,067 | $ | 121,716 | |
| Accounts receivable | 96,569 | 84,042 | |||
| Merchandise inventory | 634,283 | 556,416 | |||
| Equipment | 346,771 | 310,086 | |||
| Accum. depreciation%u2014Equipment | (161,314) | (106,260) | |||
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| Total assets | $ | 1,097,376 | $ | 966,000 | |
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| Liabilities and Equity | |||||
| Accounts payable | $ | 72,427 | $ | 100,464 | |
| Income taxes payable | 28,532 | 25,116 | |||
| Common stock, $2 par value | 566,500 | 528,500 | |||
| Paid in capital in excess of par value, common stock | 241,250 | 169,050 | |||
| Retained earnings | 188,667 | 142,870 | |||
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| Total liabilities and equity | $ | 1,097,376 | $ | 966,000 | |
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| GALLEY CORPORATION Income Statement For Year Ended December 31, 2011 |
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| Sales | $ | 2,170,000 | |||
| Cost of goods sold | 1,019,900 | ||||
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| Gross profit | 1,150,100 | ||||
| Operating expenses | |||||
| Depreciation expense | $ | 55,054 | |||
| Other expenses | 427,338 | 482,392 | |||
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| Income before taxes | 667,708 | ||||
| Income taxes expense | 130,203 | ||||
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| Net income | $ | 537,505 | |||
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| Additional Information on Year 2011 Transactions | |
| a. |
Purchased equipment for $36,685 cash. |
| b. |
Issued 19,000 shares of common stock for $5.80 cash per share. |
| c. |
Declared and paid $491,708 in cash dividends. |
| Required: | |
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Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.) |
| GALLEY CORPORATION Statement of Cash Flows For Year Ended December 31, 2011 |
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| Cash flows from operating activities | ||
| (Click to select) Cash paid for equipment Cash paid for merchandise Net increase in cash Cash received from customers Cash paid for other operating expenses Cash paid for income taxes | $ | |
| (Click to select) Cash paid for income taxes Cash received from customers Cash paid for other operating expenses Cash paid for merchandise Cash paid for equipment Net increase in cash | ||
| (Click to select) Cash paid for equipment Net increase in cash Cash paid for income taxes Cash paid for other operating expenses Cash paid for merchandise Cash received from customers | ||
| (Click to select) Cash paid for income taxes Cash paid for equipment Cash paid for merchandise Cash received from customers Net increase in cash Cash paid for other operating expenses | ||
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| Net cash (Click to select) used in provided by operating activities | $ | |
| Cash flows from investing activities | ||
| (Click to select) Cash paid for equipment Cash received from issuing stock Cash paid for income taxes Cash paid for cash dividends Depreciation expense Cash paid for merchandise | ||
| Cash flows from financing activities | ||
| (Click to select) Cash paid for cash dividends Cash from issuing stock Cash paid for other operating expenses Cash paid for income taxes Cash paid for merchandise Cash paid for equipment | ||
| (Click to select) Cash paid for merchandise Cash paid for other operating expenses Cash paid for equipment Cash paid for income taxes Cash from issuing stock Cash paid for cash dividends | ||
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| Net cash (Click to select) used in provided by financing activities | ||
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| (Click to select) Depreciation expense Net increase in cash Cash paid for merchandise Cash received from customers Net decrease in cash Cash paid for cash dividends | $ | |
| Cash balance at beginning of 2011 | ||
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| Cash balance at end of 2011 | $ | |