Description
Income Statement
For Year Ended December 31, 2011
Sales revenue $ 63,200,000
Expenses
Cost of goods sold 22,000,000
Depreciation expense 4,500,000
Salaries expense 11,000,000
Rent expense 3,000,000
Insurance expense 1,500,000
Interest expense 1,700,000
Utilities expense 1,600,000
Net income $ 17,900,000
RAPTURE COMPANY
Selected Balance Sheet Accounts
At December 31 2011 2010
Accounts receivable $ 380,000 $ 394,000
Inventory 103,000 82,000
Accounts payable 125,000 134,000
Salaries payable 44,000 30,000
Utilities payable 12,000 9,000
Prepaid insurance 15,000 17,000
Prepaid rent 13,000 16,000
Required:
Prepare the cash flows from operating activities section only of the company’s 2011 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)
RAPTURE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income to net cash provided by operating activities
$
Net cash operating activities $
Problem 16-4A Statement of cash flows (indirect method) L.O. P1, P2, P3
Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.
GALLEY CORPORATION
Comparative Balance Sheets
December 31, 2011 and 2010
2011 2010
Assets
Cash $ 170,000 $ 140,000
Accounts receivable 85,000 72,000
Merchandise inventory 620,000 525,000
Equipment 325,000 278,000
Accum. depreciation—Equipment (157,000) (100,000)
Total assets $ 1,043,000 $ 915,000
Liabilities and Equity
Accounts payable $ 147,000 $ 139,000
Income taxes payable 26,000 23,000
Common stock, $2 par value 590,000 562,000
Paid-in capital in excess of par value, common stock 198,000 156,000
Retained earnings 82,000 35,000
Total liabilities and equity $ 1,043,000 $ 915,000
GALLEY CORPORATION
Income Statement
For Year Ended December 31, 2011
Sales $ 1,794,000
Cost of goods sold 1,088,000
Gross profit 706,000
Operating expenses
Depreciation expense $ 57,000
Other expenses 494,000 551,000
Income before taxes 155,000
Income taxes expense 23,000
Net income $ 132,000
Additional Information on Year 2011 Transactions
a.
Purchased equipment for $47,000 cash.
b.
Issued 14,000 shares of common stock for $5 cash per share.
c.
Declared and paid $85,000 in cash dividends.
Required:
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)
GALLEY CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2011
Cash flows from operating activities
$
Adjustments to reconcile net income to net
cash provided by operating activities:
Net cash operating activities $
Cash flows from investing activities
Cash flows from financing activities
Net cash financing activities
$
Cash balance at beginning of 2011
Cash balance at end of 2011 $
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