Reference no: EM13513416

Use the information below and on page 777 to prepare a statement of cash flows using the indirect method.

Reynolds Company

Comparative Balance Sheets

December 31

			Change
Assets	2012	2011	Increase/Decrease
Cash	$ 54,000	$ 37,000	$ 17,000 Increase
Accounts receivable	68,000	26,000	42,000 Increase
Inventory	54,000	-0-	54,000 Increase
Prepaid expenses	4,000	6,000	2,000 Decrease
Land	45,000	70,000	25,000 Decrease
Buildings	200,000	200,000	-0-
Accumulated depreciation-buildings	(21,000)	(11,000)	10,000 Increase
Equipment	193,000	68,000	125,000 Increase
Accumulated depreciation-equipment	(28,000)	(10,000)	18,000 Increase
Totals	$569,000	$386,000

Liabilities and Stockholders' Equity

Accounts payable	$ 23,000	$ 40,000	$ 17,000 Decrease
Accrued expenses payable	10,000	-0-	10,000 Increase
Bonds payable	110,000	150,000	40,000 Decrease
Common stock ($1 par)	220,000	60,000	160,000 Increase
Retained earnings	206,000	136,000	70,000 Increase
Totals	$569,000	$386,000

Reynolds Company

Income Statement

For the Year Ended December 31, 2012

Sales revenue		$890,000
Cost of goods sold	$465,000
Operating expenses	221,000
Interest expense	12,000
Loss on sale of equipment	2,000	700,000
Income before income taxes		190,000
Income tax expense		65,000
Net income		$125,000

Additional information:

1. Operating expenses include depreciation expense of $33,000 and charges from prepaid expenses of $2,000.

2. Land was sold at its book value for cash.

3. Cash dividends of $55,000 were declared and paid in 2012.

4. Interest expense of $12,000 was paid in cash.

5. Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 and a book value of $36,000 was sold for $34,000 cash.

6. Bonds of $10,000 were redeemed at their face value for cash. Bonds of $30,000 were converted into common stock.

7. Common stock ($1 par) of $130,000 was issued for cash.

8. Accounts payable pertain to merchandise suppliers.