Reference no: EM131805452
Question - The following information pertains to Surrey Honda Ltd., a local car dealership, for the year ended December 31, 2011:
Surrey Honda Ltd. Balance Sheet December 31, 2011 (in thousands of $)
2011 2010
ASSETS
Cash 526 482
Accounts receivable - net 175 185
Inventory 985 925
Long term investment 145 180
Land 425 350
Equipment 1,045 960
Accumulated amortization - equipment (350) (275)
Total assets $ 2,951 $ 2,807
LIABILITIES AND OWNER'S EQUITY
Accounts payable 321 850
Dividends payable 10 15
Current portion of long term debt 150 0
Long term note payable - 8% 300 0
Bond payable 500 500
Premium on bonds payable 14 18
Future income tax 85 70
Common stock 825 745
Retained earnings 746 609
Total liabilities and owner's equity $ 2,951 $ 2,807
Surrey Honda Ltd. Income Statement Year Ended Dec. 31, 2011 (in thousands of $)
NET SALES $ 1,875
COST OF GOODS SOLD 1,243
GROSS PROFIT 632
OPERATING EXPENSES
Amortization of capital assets 123
Other 25 148
NET OPERATING INCOME 484
OTHER REVENUES AND EXPENSES
Gain on disposal of long term investment 10
Gain on sale of equipment 15
Interest expense (65)
NET INCOME BEFORE TAX 444
INCOME TAX (current and future) 133
NET INCOME $ 311
OTHER INFORMATION:
1. During 2011, the company purchased new equipment for $ 270,000 cash. Old equipment was sold for cash.
2. Common stock with a market value of $ 75,000 was issued in exchange for land during 2011.
3. $150,000 of the $450,000 long term note payable is due in 2009.
4. Cash dividends were declared and paid in 2011. No share dividends were declared.
REQUIRED: Using the financial statements and information provided, prepare in good form the Statement of Cash Flows for Surrey Honda Ltd. for the year ended December 31, 2011 using the indirect method.