Reference no: EM13534289
Statement of cash flows-direct method
The comparative balance sheet of Middaugh Restaurant Supplies Inc. for December 31, 2013 and 2012, is as follows:
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Assets
|
|
|
|
Cash
|
$ 330,960
|
$ 341,550
|
|
Accounts receivable (net)
|
496,320
|
457,200
|
|
Inventories
|
697,200
|
681,900
|
|
Investments
|
0
|
216,000
|
|
Land
|
480,000
|
0
|
|
Equipment
|
612,000
|
492,000
|
|
Accumulated depreciation
|
(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 expenses)
|
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 following 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.
Instructions
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.