Reference no: EM131814579
Question - Statement of Cash Flows
The comparative balance sheet of Middaugh Restaurant Supplies Inc. for December 31, 2013 and 2012 is as follows:
Assets Dec 31, 2013 Dec 31, 2012
Cash......................................................................................330,960 341,550
Accounts Receivable (net)..................................................496,320 457,200
Inventories...........................................................................697,200 681,900
Land......................................................................................0 216,000
Equipment............................................................................480,000 0
Accumulated depreciation.................................................612,000 492,000
(240,750) (184,200)
2,375,730 2,004,450
Liabilities and Stockholders' Equity
Accounts Payable(merchandise creditors).......................540,000 483,300
Accrued expenses Payable (operating exp)......................33,900 39,600
Dividends payable...............................................................50,400 45,600
Common stock, $10 par......................................................108,000 15,000
Paid-in-capital in excess of par- common stock...............364,500 225,000
Retained earnings...............................................................1,278,930 1,195,950
2,375,730 2,004,450
The income statement for the year ended December 31, 2012 is as follows:
Sales..................................................................................... 2,256,000
Cost of merchandise sold................................................... 1,176,000
Gross profit.......................................................................... 1,080,000
Operating expenses.............................................................
Depreciation expense..............................................56,550
Other operating expenses.......................................672,420
Total operating expenses............................ 728,970
Operating income................................................................. 351,030
Other income.........................................................................
Gain on sale of investments.................................... 78,000
Income before income tax................................................... 429,030
Income tax expense.............................................................. 149,550
Net income............................................................................ 279,480
The follow additional information was taken from the records:
a. Equipment and land were acquired for cash
b. There were no disposals of equipment during the year
c. The investments were sold for $294,000 cash
d. The common stock was issued for cash
e. There was a $196,500 debit to Retained Earnings for cash dividends declared.
Prepare a statement of cash flows, using the direct method of presenting cash flows for operating activities.