1. Use the information below and on page 777 to prepare a statement of cash flows using the indirect method.
Reynolds Company
Comparative Balance Sheets
December 31
|
Change |
|||
|
Assets |
2012 |
2011 |
Increase/Decrease |
|
Cash |
$ 54,000 |
$ 37,000 |
$ 17,000 Increase |
|
Accounts receivable |
68,000 |
26,000 |
42,000 Increase |
|
Inventory |
54,000 |
–0– |
54,000 Increase |
|
Prepaid expenses |
4,000 |
6,000 |
2,000 Decrease |
|
Land |
45,000 |
70,000 |
25,000 Decrease |
|
Buildings |
200,000 |
200,000 |
–0– |
|
Accumulated depreciation—buildings |
(21,000) |
(11,000) |
10,000 Increase |
|
Equipment |
193,000 |
68,000 |
125,000 Increase |
|
Accumulated depreciation—equipment |
(28,000) |
(10,000) |
18,000 Increase |
|
Totals |
$569,000 |
$386,000 |
Liabilities and Stockholders’ Equity
|
Accounts payable |
$ 23,000 |
$ 40,000 |
$ 17,000 Decrease |
|
Accrued expenses payable |
10,000 |
0 |
10,000 Increase |
|
Bonds payable |
110,000 |
150,000 |
40,000 Decrease |
|
Common stock ($1 par) |
220,000 |
60,000 |
160,000 Increase |
|
Retained earnings |
206,000 |
136,000 |
70,000 Increase |
|
Totals |
$569,000 |
$386,000 |
Reynolds Company
Income Statement
For the Year Ended December 31, 2012
|
Sales revenue |
$890,000 |
|
|
Cost of goods sold |
$465,000 |
|
|
Operating expenses |
221,000 |
|
|
Interest expense |
12,000 |
|
|
Loss on sale of equipment |
2,000 |
700,000 |
|
Income before income taxes |
190,000 |
|
|
Income tax expense |
65,000 |
|
|
Net income |
$125,000 |
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 2012.
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 face 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.
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