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Statement of Cash Flows, Direct and Indirect

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E23-11 (SCF?Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007
are presented below.
PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2008 AND 2007
2008 2007
Cash $1,800 $1,150
Receivables 1,750 1,300
Inventory 1,600 1,900
Plant assets 1,900 1,700
Accumulated depreciation (1,200) (1,170)
Long-term investments (Held-to-maturity) 1,300 1,420
$7,150 $6,300
Accounts payable $1,200 $ 900
Accrued liabilities 200 250
Bonds payable 1,400 1,550
Capital stock 1,900 1,700
Retained earnings 2,450 1,900
$7,150 $6,300
PAT METHENY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2008
Sales $6,900
Cost of goods sold 4,700
Gross margin 2,200
Selling and administrative expense 930
Income from operations 1,270
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,350
Income tax expense 540
Net income 810
Cash dividends 260
Income retained in business $ 550
Exercises ? 1259
(L0 6)
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.
E23-12 (SCF?Direct Method) Data for Pat Metheny Company are presented in E23-11.
Instructions
Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

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The solution explains how to prepare a statement of cash flows using both the direct method and the indirect method

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