Reference no: EM13536675
Taurasi Company, 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 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.
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TAURASI COMAPANY
Comparative Balance Sheets
December 31,2011 and 2010
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2011
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2010
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Assets
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Cash
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$ 53,925
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$ 31,800
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Accounts receivable
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19,425
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23,250
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Merchandise inventory
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175,350
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139,875
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Equipment
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105,450
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76,500
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Accumdepreciation-Equipment
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(48,300)
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(30,600)
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Total assets
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$305,850
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$240,825
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Liabilities and Equity
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Accounts payable
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$ 38,475
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$ 35,625
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Income taxes payable
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4,500
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6,750
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Common stock, $2 par value
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165,000
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150,000
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Paid-in capital in excess
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of par, common stock
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42,000
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15,000
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Retained earnings
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55,875
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33,450
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Total liabilities and equity
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$305,850
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$240,825
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TAURASI COMPANY
Income Statement
For Year Ended December 31, 2011
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Sales
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$609,750
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Cost of goods sold
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279,000
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Gross profit
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330,750
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Operating expenses
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$17,700
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Depreciation expense
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179,775
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Other expenses
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197,475
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Income before taxes
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133,275
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Income taxes expense
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44,850
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Net income
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$88,425
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Additional Information on Year 2011 Transactions
a. Purchased equipment for $28,950 cash.
b. Issued 3,000 shares of common stock for $14 cash per share.
c. Declared and paid $66,000 of cash dividends.
Refer to the information reported about Taurasi Company in Problem 16-4B.
Required
Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report operating activities under the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.
a. Net income was $88,425.
b. Accounts receivable decreased.
c. Merchandise inventory increased.
d. Accounts payable increased.
e. Income taxes payable decreased.
f. Depreciation expense was $17,700.
g. Purchased equipment for $28,950 cash.
h. Issued 3,000 shares at $14 cash per share.
i. Declared and paid $66,000 of cash dividends.
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