Preparing a Complete Statement of Cash Flows
The following are financial statements for Germaine Company:
|
Germaine Company |
||
|
Comparative Balance Sheet |
||
|
December 31, 2008 and 2007 |
||
|
(Dollars in thousands) |
||
|
|
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 |
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
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)
|
||
|
Sales |
|
$1,450 |
|
Cost of goods sold |
|
990 |
|
Gross profit |
|
$460 |
|
Operating expenses: |
|
|
|
Depreciation expense |
$55 |
|
|
General expenses |
340 |
|
|
Interest expense |
12 |
|
|
Income tax expense |
15 |
422 |
|
Net income |
|
$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.