Prepare a statement of cash flows using the indirect method

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Reference no: EM13899500

The following comparative balance sheets and income statement are available for Little Bit Inc. Prepare a statement of cash flows for 2012 using the indirect method and analyze the statement.

	December 31, 2012	December 31, 2011
Cash	$ 40,000	$ 24,000
Accounts receivable (net)	48,000	41,500
Inventory	43,000	34,500
Prepaid expenses	19,000	15,000
Total Current Assets	$150,000	$115,000
Plant and equipment	$ 67,000	$ 61,000
Less accumulated depreciation	(41,000)	(23,000)
Plant and equipment (net)	$ 26,000	$ 38,000
Long-term investments	90,000	89,000
Total Assets	$266,000	$242,000
Accounts payable	$ 13,000	$ 11,000
Accrued liabilities	55,000	71,000
Total Current Liabilities	$ 68,000	$ 82,000
Long-term debt	25,000	8,000
Deferred taxes	4,000	3,500
Total Liabilities	$ 97,000	$ 93,500
Common stock ($1 par) and additional paid-in capital	112,000	97,000
Retained earnings	57,000	51,500
Total Liabilities and Equity	$266,000	$242,000

Income Statement for 2012

Sales		$155,000
Cost of goods sold		83,000
Gross profit		$ 72,000
Selling and administrative	$ 45,700
Depreciation	18,000	63,700
Operating profit		$ 8,300
Interest expense		2,000
Earnings before tax		$ 6,300
Tax expense		800
Net income		$ 5,500

Reference no: EM13899500

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