Reference no: EM131535895

Question: Refer to Galley Corporation's financial statements and related information in Problem. Required Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method.

Problem: Galley Corp., a merchandiser, recently completed its 2011 operations. For the year,

(1) all sales are credit sales,

(2) all credits to Accounts Receivable reflect cash receipts from customers,

(3) all purchases of inventory are on credit,

(4) all debits to Accounts Payable reflect cash payments for inventory,

(5) Other Expenses are all cash expenses, and

(6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company's balance sheets and income statement follow.

Additional Information on Year 2011 Transactions

a. Purchased equipment for $36,000 cash.

b. Issued 12,000 shares of common stock for $5 cash per share.

c. Declared and paid $111,000 in cash dividends. Required Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method.