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Problem
Comparative balance sheet accounts of Marcus Inc. are presented below.
MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2014 AND 2013
December 31
Debit Accounts
2014
2013
Cash
$41,970
$34,080
Accounts Receivable
70,660
60,320
Inventory
29,320
24,920
Investments (available-for-sale)
22,340
38,220
Machinery
29,870
18,300
Buildings
67,460
56,480
Land
7,870
$269,490
$240,190
Credit Accounts
Allowance for Doubtful Accounts
$2,720
$1,320
Accumulated Depreciation-Machinery
6,320
2,130
Accumulated Depreciation-Buildings
13,910
8,400
Accounts Payable
35,660
24,230
Accrued Payables
3,005
2,690
Long-Term Notes Payable
20,790
31,210
Common Stock, no-par
149,400
124,700
Retained Earnings
37,685
45,510
Additional data (ignoring taxes):1. Net income for the year was $38,535.2. Cash dividends declared and paid during the year were $21,660.3. A 20% stock dividend was declared during the year. $24,700 of retained earnings was capitalized.4. Investments that cost $25,210 were sold during the year for $28,560.5. Machinery that cost $4,000, on which $701 of depreciation had accumulated, was sold for $2,443.
Marcus's 2014 income statement follows (ignoring taxes).
Sales revenue
$535,961
Less: Cost of goods sold
379,670
Gross margin
156,291
Less: Operating expenses (includes $10,401 depreciation and $5,110 bad debts)
120,250
Income from operations
36,041
Other: Gain on sale of investments
$3,350
Loss on sale of machinery
(856)
2,494
Net income
$38,535
(a) Compute net cash flow from operating activities using the direct method.
(b) Prepare a statement of cash flows using the indirect method.
Attachment:- Problem.rar
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