Use the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company.
|
ORWELL, INC. Comparative Balance Sheets December 31,2011 |
||
|
|
2011 |
2010 |
|
Assets |
|
|
|
Cash |
$ 95,800 |
$ 25,000 |
|
Accounts receivable, net |
42,000 |
52,000 |
|
Inventory |
86,800 |
96,800 |
|
Prepaid expenses |
6,400 |
5,200 |
|
Furniture |
110,000 |
120,000 |
|
Accumdepreciation—Furniture |
(18,000) |
(10,000) |
|
Total assets |
$323,000 |
$289,000 |
|
Liabilities and Equity |
|
|
|
Accounts payable |
$ 16,000 |
$ 22,000 |
|
Wages payable |
10,000 |
6,000 |
|
Income taxes payable |
2,400 |
3,600 |
|
Notes payable (long term) |
30,000 |
70,000 |
|
Common stock, $5 par value |
230,000 |
180,000 |
|
Retained earnings |
34,600 |
7,400 |
|
Total liabilities and equity |
$323,000 |
$289,000 |
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ORWELL, INC. Income Statement For Year Ended December 31,2011 |
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|
Sales |
|
$468,000 |
|
Cost of goods sold |
|
312,000 |
|
Gross profit |
|
156,000 |
|
Operating expenses |
|
|
|
Depreciation expense |
$38,600 |
|
|
Other expenses |
57,000 |
95,600 |
|
Income before taxes |
|
60,400 |
|
Income taxes expense |
|
24,600 |
|
Net income |
|
$ 35,800 |
Refer to the data in QS 16 9.
1. Assume that all common stock is issued for cash. What amount of cash dividends is paid during 2011?
2. Assume that no additional notes payable are issued in 2011. What cash amount is paid to reduce the notes payable balance in 2011?