Talbot Corporation - Cash Flow Statement indirect method
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The comparative balance sheets for Talbot Corporation show the following information:
December 31
2008 2007
Cash $1,800 $1,050
Accounts receivable 1,750 1,400
Inventory 1,600 1,800
Plant Assets 1,900 1,700
Accumulated depreciation (1,200) (1,150)
Long-term investments (Held-to-maturity) 1,300 1,320
Totals $7,150 $6,120
Accounts payable $1,200 $800
Accrued liabilities 200 270
Bonds payable 1,400 1,550
Common stock 1,900 1,700
Retained earnings 2,450 1,800
Totals $7,150 $6,120
Talbot Corporation
Income Statement
For the Year Ended December 31, 2008
Sales $6,900
Cost of goods sold 4,600
Gross margin 2,300
Selling and administrative expense 930
Income from operations 1,370
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,450
Income tax expense 540
Net income 910
Cash dividends 260
Income retained in business $650
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant
assets were sold in 2008.
Instructions:
Prepare a statement of cash flows using the indirect method.
TALBOT CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2008
Cash flows from operating activities
Net income Amount
Adjustments to reconcile net income to net cash provided by operating activities:
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Net cash provided by operating activities Formula
Cash flows from investing activities
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Net cash provided by investing activities Formula
Cash flows from financing activities
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Net cash used by financing activities Formula
Increase in cash Amount
Cash, January 1, 2008 Amount
Cash, December 31, 2008 Formula
Noncash investing and financing activities
Text Title Amount
Instructions:
Prepare a statement of cash flows using the direct method.
(Do not prepare a reconciliation schedule).
TALBOT CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2008
Cash flows from operating activities
Text Title Amount
Text Title Amount
Text Title Amount
Text Title Amount Formula
Net cash provided by operating activities Formula
Cash flows from investing activities
Text Title Amount
Text Title Amount
Net cash provided by investing activities Formula
Cash flows from financing activities
Text Title Amount
Text Title Amount
Text Title Amount
Net cash used by financing activities Formula
Increase in cash Amount
Cash, January 1, 2008 Amount
Cash, December 31, 2008 Formula
Noncash investing and financing activities
Text Title Amount
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Solution Summary
The solution prepares cash flows using the indirect method for Talbot Corporation.
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