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Cash Flow and the Indirect Method

Comparative Balance Sheet

December, 31

2009 2008
Cash $ 1,090 $ 4,000
Accounts Receivable 2,910 6,150
Inventory 4,800 3,880
Prepaid Advertising 700 1,775
Building and Furnishings 40,000 40,000
Accumulated Depreciation (10,000) (10,000)
Land 27,000 15,000
Total Assets 66,500 62,805
Rent Payable 2,000 4,000
Taxes Payable 1,900 1,500
Wages Payable 3,300 2,200
Loan Payable, Long-Term 19,600 26,805
Common Stock 31,000 25,000
Retained Earnings 8,700 3,300
Total Liability And Equity 66,500 62,805

Income Statement for 209
Sales Revenue 350,000
Cost of Goods Sold 250,600
Gross Profit 99,400

Operating Expenses
Advertising 9,500
Depreciation 2,000
Insurance 4,100
Rent 28,900
Wages 40,450
Operating Income 14,450
Interest Expense 1,600
Income before tax 12,850
Taxes 3,850
Net Income 9,000

Prepare a statement of cash flows using the indirect method format, please align all headings.

Solution Summary

The cash flow and the indirect methods are examined in the solution.

$2.19