Problem
Comparative balance sheet accounts of Marcus Inc. are presented below.
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MARCUS INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2014 AND 2013
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December 31
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Debit Accounts
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2014
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2013
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Cash
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$41,970
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$34,080
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Accounts Receivable
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70,660
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60,320
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Inventory
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29,320
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24,920
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Investments (available-for-sale)
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22,340
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38,220
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Machinery
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29,870
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18,300
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Buildings
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67,460
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56,480
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Land
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7,870
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7,870
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$269,490
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$240,190
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Credit Accounts
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Allowance for Doubtful Accounts
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$2,720
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$1,320
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Accumulated Depreciation-Machinery
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6,320
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2,130
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Accumulated Depreciation-Buildings
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13,910
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8,400
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Accounts Payable
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35,660
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24,230
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Accrued Payables
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3,005
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2,690
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Long-Term Notes Payable
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20,790
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31,210
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Common Stock, no-par
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149,400
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124,700
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Retained Earnings
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37,685
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45,510
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$269,490
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$240,190
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Additional data (ignoring taxes):
1. Net income for the year was $38,535.
2. Cash dividends declared and paid during the year were $21,660.
3. A 20% stock dividend was declared during the year. $24,700 of retained earnings was capitalized.
4. Investments that cost $25,210 were sold during the year for $28,560.
5. Machinery that cost $4,000, on which $701 of depreciation had accumulated, was sold for $2,443.
Marcus's 2014 income statement follows (ignoring taxes).
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Sales revenue
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$535,961
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Less: Cost of goods sold
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379,670
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Gross margin
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156,291
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Less: Operating expenses (includes $10,401 depreciation and $5,110 bad debts)
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120,250
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Income from operations
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36,041
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Other: Gain on sale of investments
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$3,350
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Loss on sale of machinery
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(856)
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2,494
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Net income
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$38,535
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(a) Compute net cash flow from operating activities using the direct method.
(b) Prepare a statement of cash flows using the indirect method.
Attachment:- Problem.rar