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.

TAURASI COMAPANY Comparative Balance Sheets December 31,2011 and 2010
	2011	2010
Assets
Cash	$ 53,925	$ 31,800
Accounts receivable	19,425	23,250
Merchandise inventory	175,350	139,875
Equipment	105,450	76,500
Accumdepreciation-Equipment	(48,300)	(30,600)
Total assets	$305,850	$240,825
Liabilities and Equity
Accounts payable	$ 38,475	$ 35,625
Income taxes payable	4,500	6,750
Common stock, $2 par value	165,000	150,000
Paid-in capital in excess
of par, common stock	42,000	15,000
Retained earnings	55,875	33,450
Total liabilities and equity	$305,850	$240,825

 

TAURASI COMPANY Income Statement  For Year Ended December 31, 2011
Sales		$609,750
Cost of goods sold		279,000
Gross profit		330,750
Operating expenses	$17,700
Depreciation expense	179,775
Other expenses		197,475
Income before taxes		133,275
Income taxes expense		44,850
Net income		$88,425

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.