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Statement of cash flows

Prepare the Spartan Inn's SCF for 2002 using the indirect method.
See attached file for full problem description.

Spartan Inn
Condensed Balance Sheets
December 31, 2001 and 2002
Assets 2001 2002
Current Assets
Cash $30,000 $40,000
Marketable securities 50000 50000
Accounts receivable 100000 95000
Inventories 20000 25000
Total current assets 200000 210000
Investments 100000 60000
Property and Equipment
Land 500000 500000
Building 5000000 6000000
Equipment 1000000 1100000
Accumulated depreciation -1600000 -2000000
Net property and equipment 4900000 5600000
Total Assets $5,200,000 $5,870,000

Liabilities and Owners' Equity
Current Liabilities
Accounts payable $60,000 $70,000
Dividends payable 30000 50000
Current portion of LTD 100000 130000
Total 190000 250000
Long-term debt 4000000 4370000
Capital stock 700000 700000
Retained earnings 310000 550000
Total Liabilities and Owners' Equity $5,200,000 $5,870,000

Spartan Inn
Condensed Income Statement
For the year ended December 31,2002
Sales $6,000,000
Cost of sales 1000000
Gross profit 5000000
Depreciation 400000
Other expenses(except depreciation) 4500000
Net operating income 100000
Gain on sales of investments 300000
Income taxes 110000
Net income $290,000

Additional information:
1. Dividends declared during 2002 totaled $50000.
2. No investments were purchased during 2002.
3. The current portion of long-term debt at the end of 2002 was reclassified from noncurrent during 2002.
4. No equipment or building were sold during 2002.
5. Long-term debt was borrowed to partially finance the building purchase.

REQUIRED:
Prepare the Spartan Inn's SCF for 2002 using the indirect method.

Attachments

Solution Preview

Spartan Inn
Condensed Balance Sheets
December 31, 2001 and 2002
Assets 2001 2002
Current Assets
Cash $30,000 $40,000
Marketable securities 50,000 50,000
Accounts receivable 100,000 95,000
Inventories 20,000 25,000
Total current assets 200,000 210,000
Investments 100,000 60,000
Property and Equipment
Land 500,000 500,000
Building 5,000,000 6,000,000
Equipment 1,000,000 1,100,000
Accumulated depreciation -1,600,000 -2,000,000
Net property and equipment 4,900,000 5,600,000
Total Assets $5,200,000 $5,870,000

Liabilities and Owners' Equity
Current Liabilities
Accounts payable $60,000 $70,000
...

Solution Summary

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

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