Todays Fashion is a local retailer of trend setting clothing. The company income statement and comparative balance sheets are presented below. In addition, the following information was gathered from the company records:
-No new debt was issued during the year
-Dividends of $200,000 were declared by the board of directors
-Equipment with an original cost of $20,000 was sold for $9,000, The equipment had accumulated depreciation of $15,000 at the time of sale.
Requirement:
Prepare the company statement of cash flows using the indirect method.
Todays Fashion Income Statement for the Year ended December 31, 2012
| sales revenue |
| $4,750,000 |
| COGS |
|
3,562,500 |
| Gross profit |
|
1,187,500 |
| Operating Expenses: |
|
|
| Salaries and wages |
$340,000 |
|
| Insurance |
10,000 |
|
| Depreciation |
75,000 |
|
| Other op. Expenses |
125,000 |
550,000 |
| operating income |
|
637,500 |
| other income and expenses: |
|
|
| interest expense |
8,000 |
|
| Gain on sale of PP and Equipment |
4,000 |
4,000 |
| Income before Taxes |
|
633,500 |
| Income tax expense |
|
190,050 |
| Net Income |
|
$44,450 |
|
|
|
Todays Fashion Comparative Balance Sheets December 31 2012 and 2011:
| Assets: |
2012 |
2011 |
Change |
| Current Assets: |
|
|
|
| Cash and cash equivalents |
$187,000 |
$85,000 |
$102,000 |
| Acct. Receivable |
37,000 |
57,000 |
(20,000) |
| Inventory |
337,500 |
350,000 |
(12,500) |
| Prepaid Insurance |
5,000 |
3,000 |
2,000 |
| Total Current Assets |
566,500 |
495,000 |
|
|
|
|
|
| Property Plant and Equipment |
1,860,000 |
1,660,000 |
200,000 |
| Less accumulated Depreciation |
(310,000) |
(250,000) |
6,000 |
| Investments |
50,000 |
50,000 |
0 |
| Total Assets |
$2,166,500 |
$1,955,000 |
|
|
|
|
|
| Liabilities: |
|
|
|
| Current Liabilities: |
|
|
|
| Accounts Payable |
$65,000 |
$85,000 |
(20,000) |
| Wages Payable |
29,000 |
25,000 |
4,000 |
| Interest Payable |
2,000 |
8,000 |
(6,000) |
| Income Taxes Payable |
100,050 |
85,000 |
15,050 |
| other accrued expenses payable |
13,000 |
18,000 |
(5,000) |
| Total Current liabilities |
209,050 |
221,000 |
|
|
|
|
|
| Long term Liabilities |
80,000 |
100,000 |
(20,000) |
| Total Liabilities |
289,050 |
321,000 |
|
|
|
|
|
| Stockholders Equity |
|
|
|
| Common Stock |
850,000 |
850,000 |
0 |
| Retained Earnings |
1,027,450 |
784,000 |
243,450 |
| Total Stcok holdersEquity |
1,877,450 |
1,634,000 |
|
| Total Liabilities and Equity |
2,166,500 |
1,955,000 |
|