Problem 12-3_Problem 12-4_Statement of Cash Flows

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Description

Problem 12-3 Statement
of Cash Flows (Direct Method)

Peoria Corp. just
completed another successful year, as indicated by the following income statement:

For
the Year Ended

December
31, 2012

Sales revenue $1,250,000

Cost of goods sold
700,000

Gross profit $ 550,000

Operating expenses 150,000

Income before interest
and taxes $ 400,000

Interest expense 25,000

Income before taxes $ 375,000

Income tax expense 150,000

Net income $ 225,000

Presented here are
comparative balance sheets:

December 31 2012 2011

Cash $
52,000 $ 90,000

Accounts receivable 180,000 130,000

Inventory 230,000 200,000

Prepayments 15,000 25,000

Total current assets $ 477,000 $ 445,000

Land $
750,000 $ 600,000

Plant and equipment 700,000 500,000

Accumulated
depreciation (250,000)
(200,000)

Total long-term assets $1,200,000 $
900,000

Total assets $1,677,000
$1,345,000

Accounts payable $ 130,000 $ 148,000

Other accrued
liabilities 68,000 63,000

Income taxes payable 90,000
110,000

Total current
liabilities $ 288,000 $ 321,000

Long-term bank loan
payable $ 350,000 $
300,000

Common stock $
550,000 $ 400,000

Retained earnings 489,000 324,000

Total stockholders
equity $1,039,000 $
724,000

Total liabilities and
stockholders equity $1,677,000 $1,345,000

Other information is as
follows:

a. Dividends of $60,000
were declared and paid during the year.

b. Operating expenses
include $50,000 of depreciation.

c. Land and plant and
equipment were acquired for cash, and additional stock was issued for cash.
Cash also was received from additional bank loans.

Required:

Prepare statement of
cash flows for 2012 usingdirect methodin the operating activities section

Problem 12-4 Statement
of Cash Flows Indirect Method

Refer to all of the
facts in Problem 12-3.

Required

Prepare a statement of
cash flows for 2012 using theindirect methodin the Operating Activities section.

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