Presented below is information related to Reynolds Gourmet Foods Company. Use it to Prepare a statement of cash flows using the indirect method.
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REYNOLDS GOURMET FOODS COMPANY Comparative Balance Sheets December 31 |
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Assets |
2009 |
2008 |
Change Increase/Decrease |
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Cash |
$54,000 |
$37,000 |
$ 17,000 Increase |
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Accounts receivable |
68,000 |
26,000 |
42,000 Increase |
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Inventories |
54,000 |
–0– |
54,000 Increase |
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Prepaid expenses |
4,000 |
6,000 |
2,000 Decrease |
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Land |
45,000 |
70,000 |
25,000 Decrease |
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Buildings |
200,000 |
200,000 |
–0– |
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Accumulated depreciation—buildings |
21,000 |
11,000 |
10,000 Increase |
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Equipment |
193,000 |
68,000 |
125,000 Increase |
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Accumulated depreciation—equipment |
28,000 |
10,000 |
18,000 Increase |
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Totals |
$569,000 |
$386,000 |
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Liabilities and Stockholders’ Equity |
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Accounts payable |
$23,000 |
$40,000 |
$ 17,000 Decrease |
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Accrued expenses payable |
10,000 |
–0– |
10,000 Increase |
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Bonds payable |
110,000 |
150,000 |
40,000 Decrease |
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Common stock ($1 par) |
220,000 |
60,000 |
160,000 Increase |
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Retained earnings |
206,000 |
136,000 |
70,000 Increase |
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Totals |
$569,000 |
$386,000 |
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REYNOLDS GOURMET FOODS COMPANY Income Statement For the Year Ended December 31, 2009 |
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Revenues |
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$890,000 |
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Cost of goods sold |
$465,000 |
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Operating expenses |
221,000 |
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Interest expense |
12,000 |
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Loss on sale of equipment |
2,000 |
700,000 |
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Income from operations |
190,000 |
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Income tax expense |
65,000 |
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Net income |
$125,000 |
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Additional information:
1. Operating expenses include depreciation expense of $33,000 and charges from prepaid expenses of $2,000.
2. Land was sold at its book value for cash.
3. Cash dividends of $55,000 were declared and paid in 2009.
4. Interest expense of $12,000 was paid in cash.
5. Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 and a book value of $36,000 was sold for $34,000 cash.
6. Bonds of $10,000 were redeemed at their book value for cash. Bonds of $30,000 were converted into common stock.
7. Common stock ($1 par) of $130,000 was issued for cash. 8. Accounts payable pertain to merchandise suppliers.