Reference no: EM132386195
Question
Prepare statement of cash flows-indirect method.
The income statement and additional data of Rayborn Services, Inc., follow:
Revenues:
Sales Revenue 262,000
Dividend Revenue 11,000
Total Revenue 273,000
Expenses:
Cost of Goods Sold 107,000
Salary Expense 60,000
Depreciation Expense 18,000
Advertising Expense 14,000
Interest Expense 9,000
Income Tax Expense 8,000
Total Expenses 216,000
Net Income 57,000
Additional data follows:
A. Acquisition of plant assets totaled $116,000. Of this amount, $101,000 was paid in cash and a $15,000 note payable was isgned for the remainder.
B. Proceeds from the sale of land totaled $22,000. No gain was recognized on the sale.
C. Proceeds from issuance of common stock total $34,000.
D. Payment of long-term note payable was $15,000.
E. Payment of dividends was $14,000.
F. Data from the comparative balance sheet follow:
June 30 2010 2009
Current Assets:
Cash $30,000 $21,000
Accounts Receivable $42,000 $57,000
Inventory $89,000 $83,000
Current Liabilities:
Accounts Payable $38,000 $31,000
Accrued Liabilities $12,000 $20,000
Requirements:
Prepare Rayborn Services' statement of cash flow for the year ended April 30, 2010, using the indirect method.
Evaluate Rayborn Services' cash flow for the year. In your evaluation, mention all three categories of cash flows and give the reason for your evaluation.
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