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Statement of cash flows

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abc company
Income Statement
For the Year ended 12/31/08

Sales 297,500
Gain on sale of plant assets 5,000
302,500
Less:
CGS 99,460
Operating expenses, excluding depreciation 14,670
Interest Expense 2,940
Depreciation Expense 35,500
Income Tax Expense 7,270 159,840

Net Income 142,660

abc company
Balance Sheet
December 31
2008 2007
Assets
Cash 92,700 33,400
Accounts Receivable 80,800 37,000
Inventory 121,900 102,650
Investments 84,500 107,000
Plant Assets 310,000 205,000
Accumulated Depreciation (49,500) (40,000)

Total Assets 640,400 445,050

Liabilities & Stockholder's Equity
Accounts Payable 62,700 48,280
Accrued expenses payable 12,100 18,830
Bonds Payable 140,000 70,000
Common Stock 250,000 200,000
Retained Earnings 175,600 107,940

Total Liability & Stockholder's Equity 640,400 445,050

Additional Information:

1. Cash Dividends declared and paid during the year $75,000
2. Plant assets costing $36,000 were sold for $15,000 resulting in a gain of $5000
3. Investments were sold at cost
4. New plant assets costing $141,000 were purchased for cash during the year.

REQUIRED:
Prepare a Statement of Cash Flows using the indirect method.

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Solution Summary

The solution explains how to prepare a statement of cash flows using the indirect method. Plant asset costing is analyzed.

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abc company
Income Statement
For the Year ended 12/31/08

Sales 297,500
Gain on sale of plant assets 5,000
302,500
Less:
CGS 99,460
Operating expenses, excluding depreciation 14,670
Interest Expense 2,940
Depreciation Expense 35,500
Income Tax Expense 7,270 159,840

Net Income 142,660

abc company
Balance Sheet
December 31
2008 2007 Change
Assets
Cash 92,700 33,400
Accounts Receivable 80,800 37,000 -43,800
Inventory 121,900 102,650 -19,250
Investments 84,500 107,000 22,500
Plant Assets 310,000 205,000 -105,000
Accumulated Depreciation (49,500) (40,000)

Total Assets ...

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