Preparing a Complete Statement of Cash Flows
The following are financial statements for Germaine Company:
Germaine Company |
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Comparative Balance Sheet |
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December 31, 2008 and 2007 |
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(Dollars in thousands) |
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2008 |
2007 |
Assets |
|
|
Cash |
$22 |
$16 |
Accounts receivable |
225 |
245 |
Inventory |
105 |
125 |
Prepaid general expenses |
21 |
12 |
Plant assets |
1,025 |
1,000 |
Accumulated depreciation—plant assets |
(530) |
(585) |
Total assets |
$ 868 |
$ 813 |
Liabilities and Stockholders’ Equity |
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Accounts payable |
$70 |
$45 |
Interest payable |
15 |
12 |
Income taxes payable |
80 |
77 |
Bonds payable |
105 |
97 |
Common stock |
362 |
354 |
Retained earnings |
236 |
228 |
Total liabilities and stockholders’ equity |
$ 868 |
$ 813 |
Germaine Company Condensed Income Statement For the Year Ended December 31, 2008 (Dollars in thousands)
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Sales |
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$1,450 |
Cost of goods sold |
|
990 |
Gross profit |
|
$460 |
Operating expenses: |
|
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Depreciation expense |
$55 |
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General expenses |
340 |
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Interest expense |
12 |
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Income tax expense |
15 |
422 |
Net income |
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$38 |
The following information is also available for 2008:
(a) Plant assets were sold for their book value of $180 during the year. The assets had an original cost of $290.
(b) Cash dividends totaling $30 were paid during the year.
(c) All accounts payable relate to inventory purchases.
(d) All purchases of plant assets were cash transactions.
Prepare a statement of cash flows for 2008 using the indirect method.