Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2012.
| ANDREWS INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2012 AND 2011 |
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| 12/31/12 | 12/31/11 | |||||
| Cash | $5,890 | $8,992 | ||||
| Accounts receivable | 62,200 | 49,131 | ||||
| Short term investments (available for sale) | 34,888 | 18,110 | ||||
| Inventory | 39,922 | 60,138 | ||||
| Prepaid rent | 4,991 | 4,047 | ||||
| Equipment | 153,710 | 128,060 | ||||
| Accumulated depr.”equipment | (34,823 | ) | (25,013 | ) | ||
| Copyrights | 46,037 | 49,864 | ||||
| Total assets | $312,815 | $293,329 | ||||
| Accounts payable | $45,929 | $42,103 | ||||
| Income taxes payable | 4,149 | 5,970 | ||||
| Salaries and wages payable | 7,871 | 3,817 | ||||
| Short term loans payable | 7,962 | 9,818 | ||||
| Long term loans payable | 60,143 | 67,132 | ||||
| Common stock, $10 par | 104,300 | 104,300 | ||||
| Contributed capital, common stock | 28,790 | 28,790 | ||||
| Retained earnings | 53,671 | 31,399 | ||||
| Total liabilities & stockholders’ equity | $312,815 | $293,329 | ||||
| ANDREWS INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2012 |
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| Sales | $339,167 | |||
| Cost of goods sold | 175,290 | |||
| Gross margin | 163,877 | |||
| Operating expenses | 119,690 | |||
| Operating income | 44,187 | |||
| Interest expense | $11,436 | |||
| Gain on sale of equipment | 2,094 | 9,342 | ||
| Income before tax | 34,845 | |||
| Income tax expense | 6,792 | |||
| Net income | $28,053 | |||
Additional information:
| 1. | Dividends in the amount of $5,781 were declared and paid during 2012. | |
| 2. | Depreciation expense and amortization expense are included in operating expenses. | |
| 3. | No unrealized gains or losses have occurred on the investments during the year. | |
| 4. | Equipment that had a cost of $31,120 and was 70% depreciated was sold during 2012. |
Prepare a statement of cash flows using the direct method.
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