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Biven Corporation Balance Sheets

1. Biven Corporation's balance sheet and income statement appear below:

BALANCE SHEETS

2006 2005
ASSETS
Cash & equivalents $35,000 $30,000
Accounts receivable 54,000 49,000
Inventory 67,000 58,000
Plant & equipment 580,000 530,000
Accumulated depreciation (316,000) (313,000)
Total Assets $420,000 $354,000

LIABILITIES & EQUITIES
Accounts payable $51,000 $57,000
Wages payable 26,000 24,000
Taxes payable 11,000 10,000
Deferred taxes payable 25,000 24,000
Bonds payable (long term) 77,000 90,000
Total liabilities 190,000 205,000
Common stock 33,000 30,000
Retained earnings 197,000 119,000
Total equities 230,000 149,000
Total liabilities & equities $420,000 $354,000

INCOME STATEMENTS
2006 2005
Sales $620,000 $520,000
Cost of goods sold 381,000 300,000
Gross margin 239,000 220,000
Selling & Admin expense 103,000 99,000
Net operating income 136,000 121,000
Gain on sale of plant & equipment 20,000 -
Income before tax 156,000 121,000
Income tax 47,000 36,000
Net income $109,000 $85,000

Cash dividends were $31,000. The company sold equipment for $20,000.
The equipment had originally cost $14,000 and was fully depreciated.

Required:
Prepare a statement of cash flows for 2006 using the indirect and direct methods.

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This solution is comprised of a detailed explanation to prepare a statement of cash flows for 2006 using the indirect and direct methods.

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