Preparation of cash flows statement using indirect

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Reference no: EM13356411

Preparation of cash flows statement using indirect method.

Presented below is information related to the operations of Bryers Corporation.

December
	2006	2005		2006
Cash	$63,000	$40,000	Sales	$420,000
Accounts receivable	58,000	48,000	Cost of goods sold	190,000
Inventory	37,000	22,000	Gross profit	230,000
Prepaid expenses	16,000	20,000	Depreciation expense	14,000
Land	36,000	20,000	Other operating expenses	141,000
Building	100,000	100,000	Income from operations	75,000
Accumulated depreciation-	Loss on equipment sale			2,000
building	-17,000	-8,000	Income before income taxes	73,000
Equipment	58,000	80,000	Income tax expense	23,000
Accumulated depreciation-			Net income	$50,000
equipment	-15,000	-20,000
	Total	$336,000	$302,000

Accounts payable	$35,000	$39,000
Bonds payable	0	100,000
Common stock	200,000	100,000
Retained earnings	101,000	63,000
	Total	$336,000	$302,000

Additional information:

In 2006,
(a) Bryers declared and paid a cash dividend of $12,000.
(b) The company converted $100,000 of bonds into common stock.
(c) Equipment with a cost of $22,000 and a book value of $12,000 was sold for $10,000. Land was acquired for cash.
(d) Prepaid expenses pertain to operating expenses; accounts payable pertains to merchan-dise purchases.

Instructions

Prepare a statement of cash flows in proper form for 2006, using the indirect or the direct method, your choice.

Reference no: EM13356411

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