Problem 23-6_MARCUS INC_statement of cash flows

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Problem 23-6

Comparative balance sheet accounts of Marcus Inc. are presented below.

MARCUS INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2012 AND 2011

December 31

Debit Accounts

2012

2011

Cash

$41,940

$33,490

Accounts Receivable

70,330

60,340

Inventory

29,850

24,210

Investments (available-for-sale)

22,460

38,200

Machinery

30,150

19,150

Buildings

67,150

56,070

Land

7,440

7,440

$269,320

$238,900

Credit Accounts

Allowance for Doubtful Accounts

$2,850

$1,130

Accumulated Depreciation—Machinery

6,280

2,160

Accumulated Depreciation—Buildings

14,010

8,730

Accounts Payable

35,650

24,290

Accrued Payables

3,240

2,817

Long-Term Notes Payable

20,770

31,040

Common Stock, no-par

150,700

124,300

Retained Earnings

35,820

44,433

$269,320

$238,900

Additional data (ignoring taxes):

1.

Net income for the year was $39,067.

2.

Cash dividends declared and paid during the year were $21,280.

3.

A 20% stock dividend was declared during the year. $26,400 of retained earnings was capitalized.

4.

Investments that cost $25,000 were sold during the year for $28,340.

5.

Machinery that cost $3,210, on which $727 of depreciation had accumulated, was sold for $1,662.

Marcus’s 2012 income statement follows (ignoring taxes).

Sales

$537,688

Less: cost of goods sold

380,630

Gross margin

157,058

Less: Operating expenses (includes $10,127 depreciation and $5,970 bad debts)

120,510

Income from operations

36,548

Other: Gain on sale of investments

$3,340

Loss on sale of machinery

(821

)

2,519

Net income

$39,067

(a)Compute net cash flow from operating activities using the direct method.

(b)Prepare a statement of cash flows using the indirect method.

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