Reference no: EM13713465

The three accounts shown below and on page 626 appear in the general ledger of Cesar Corp. during 2007.

Equipment
Date		Debit	Credit	Balance
Jan.1	Balance			160,000
July 31	Purchase of equipment	70,000		230,000
Sept. 2	Cost of equipment constructed	53,000		283,000
Nov. 10	Cost of equipment sold		49,000	234,000
Accumulated Depreciation- Equipment
Date		Debit	Credit	Balance
Jan. 1	Balance			71,000
Nov. 10	Accumulated depreciation on equipment sold	30,000		41,000
Dec. 31	Depreciation for year		28,000	69,000
Retained Earnings
Date		Debit	Credit	Balance
Jan. 1	Balance			105,000
Aug. 23	Dividends (cash)	14,000		91,000
Dec. 31	Net income		67,000	158,000

Instructions

From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)

P*12-5A Grania Company's income statement contained the condensed information below.

GRANIA COMPANY Income Statement For the Year Ended December 31, 2007
Revenues		$970,000
Operating expenses, excluding depreciation	$624,000
Depreciation expense	60,000
Loss on sale of equipment	16,000	700,000
Income before income taxes		270,000
Income tax expense		40,000
Net income		$230,000

Grania's balance sheet contained the comparative data at December 31, shown on page 630.

	2007	2006
Accounts receivable	$75,000	$60,000
Accounts payable	41,000	28,000
Income taxes payable	11,000	7,000

Accounts payable pertain to operating expenses.

Instructions

Prepare the operating activities section of the statement of cash flows using the indirect method.

*P12-6A Data for Grania Company are presented in P12-5A.

Instructions

Prepare the operating activities section of the statement of cash flows using the direct method.