Reference no: EM132588137
You are the controller for Foxboro Technologies. Your staff has prepared an income statement for the current year and has developed the following additional information by analyzing changes in the company's balance sheet accounts:
FOXBORO TECHNOLOGIES
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2011
Revenue:
Net sales........................................................................................ $ 3,400,000
Interest revenue..................................................................... 60,000
Gain on sales of marketable securities......................................... 25,000
Total revenue and gains.......................................................... 3,485,000
Costs and expenses:
Cost of goods sold.................................................... $ 1,500,000
Operating expense (including depreciation
Of $ 75, 000)......................................................... 900,000
Interest expense....................................... 27,000
Income tax expense...................................................... 115,000
Loss on sales of plant assets....................................... 8,000
Total costs, expenses, and losses............................................. 2,550,000
Net income .................................................................................... $ 935,000
ADDITIONAL INFORMATION:
1. Account receivable increased by $60,000
2. Accrued interest receivable decreased by $5,000
3. Inventory decreased by $30,000 and accounts payable to suppliers of merchandise decreased by $22,000.
4. Short-term prepayments of operating expenses increased by $8,000 and accrued liabilities for operating expenses decreased by $9,000.
5. The liability for accrued interest payable increased by $4,000 during the current year.
6. The liability for accrued income taxes payable decreased by $10,000 during the year,
7. The following schedule summarizes the total debit and credit entries during the year in other balance sheet accounts:
Debit Credit
Entries Entries
Marketable securities......................................................................................... $ 50,000 $ 40,000
Notes receivable (cash loans made to borrowers)............................................ 30,000 27,000
Plant assets (see paragraph 8)......................................................................... 350,000 30,000
Notes payable (short-term borrowing)...................................................... 70,000 56,000
Capital stock..................................................................................................... 60,000
Additional paid-in-capital-capital stock.................................................... 100,000
Retained earnings........................................................................................ 300,000 935,000
8. The $30,000 in credit entries to the plant assets account is net of any debits to accumulated depreciation when plant assets were retired. Thus, the $30,000 in credit entries represent the book value of all plant assets sold or retired during the year.
9. The $300,000 debit to the retained earnings represents dividends declared and paid during the year. The $935,000 credit entry represents the net income shown in the income statement.
10. All investing and financing activities were cash transactions.
11. Cash and cash equivalents amounted to $20,000 at the beginning of the year and to $473,000 at the year-end
Required
Question 1: Prepare the statement of cash flows for the year ended 31 December, 2011.