Problem - The comparative balance sheets for Ramirez Company as of December 31 are presented below.
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RAMIREZ COMPANY Comparative Balance Sheets December 31
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Assets
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2011
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2010
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Cash
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$71,000
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$45,000
|
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Accounts receivable
|
44,000
|
62,000
|
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Inventory
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151,450
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142,000
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Prepaid expenses
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15,280
|
21,000
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Land
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105,000
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130,000
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Equipment
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228,000
|
155,000
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Acc. Depr. - equipment
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(45,000)
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(35,000)
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Building
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200,000
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200,000
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Acc. Depr. - building
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(60,000)
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(40,000)
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Total
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$709,730
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$680,000
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Liabilities and Stockholders' Equity
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|
|
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Accounts payable
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$47,730
|
$40,000
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Bonds payable
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260,000
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300,000
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Common stock, $1 par
|
200,000
|
160,000
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Retained earnings
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202,000
|
180,000
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Total
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$709,730
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$680,000
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Additional Information -
1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720.
2. Land was sold for cash at book value.
3. Cash dividends of $15,000 were paid.
4. Net income for 2011 was $37,000.
5. Equipment was purchased for $95,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $6,000 cash.
6. Bonds were converted at face value by issuing 40,000 shares of $1 par value common stock.
Required - Prepare a statement of cash flows for the year ended December 31, 2011, using the indirect method.