Todays fashion is a local retailer of trend setting

Reference no: EM13570202

Todays Fashion is a local retailer of trend setting clothing. The company income statement and comparative balance sheets are presented below. In addition, the following information was gathered from the company records:

-No new debt was issued during the year

-Dividends of $200,000 were declared by the board of directors

-Equipment with an original cost of $20,000 was sold for $9,000, The equipment had accumulated depreciation of $15,000 at the time of sale.

Requirement:

Prepare the company statement of cash flows using the indirect method.

Todays Fashion Income Statement for the Year ended December 31, 2012

sales revenue		$4,750,000
COGS		3,562,500
Gross profit		1,187,500
Operating Expenses:
Salaries and wages	$340,000
Insurance	10,000
Depreciation	75,000
Other op. Expenses	125,000	550,000
operating income		637,500
other income and expenses:
interest expense	8,000
Gain on sale of PP and Equipment	4,000	4,000
Income before Taxes		633,500
Income tax expense		190,050
Net Income		$44,450

Todays Fashion Comparative Balance Sheets December 31 2012 and 2011:

Assets:	2012	2011	Change
Current Assets:
Cash and cash equivalents	$187,000	$85,000	$102,000
Acct. Receivable	37,000	57,000	(20,000)
Inventory	337,500	350,000	(12,500)
Prepaid Insurance	5,000	3,000	2,000
Total Current Assets	566,500	495,000

Property Plant and Equipment	1,860,000	1,660,000	200,000
Less accumulated Depreciation	(310,000)	(250,000)	6,000
Investments	50,000	50,000	0
Total Assets	$2,166,500	$1,955,000

Liabilities:
Current Liabilities:
Accounts Payable	$65,000	$85,000	(20,000)
Wages Payable	29,000	25,000	4,000
Interest Payable	2,000	8,000	(6,000)
Income Taxes Payable	100,050	85,000	15,050
other accrued expenses payable	13,000	18,000	(5,000)
Total Current liabilities	209,050	221,000

Long term Liabilities	80,000	100,000	(20,000)
Total Liabilities	289,050	321,000

Stockholders Equity
Common Stock	850,000	850,000	0
Retained Earnings	1,027,450	784,000	243,450
Total Stcok holdersEquity	1,877,450	1,634,000
Total Liabilities and Equity	2,166,500	1,955,000

Reference no: EM13570202

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