Preparation of cash flows statement using indirect method.
Presented below is information related to the operations of Bryers Corporation.
|
December
|
|
|
2006
|
2005
|
|
2006
|
|
Cash
|
$63,000
|
$40,000
|
Sales
|
$420,000
|
|
Accounts receivable
|
58,000
|
48,000
|
Cost of goods sold
|
190,000
|
|
Inventory
|
37,000
|
22,000
|
Gross profit
|
230,000
|
|
Prepaid expenses
|
16,000
|
20,000
|
Depreciation expense
|
14,000
|
|
Land
|
36,000
|
20,000
|
Other operating expenses
|
141,000
|
|
Building
|
100,000
|
100,000
|
Income from operations
|
75,000
|
|
Accumulated depreciation-
|
Loss on equipment sale
|
|
|
2,000
|
|
building
|
-17,000
|
-8,000
|
Income before income taxes
|
73,000
|
|
Equipment
|
58,000
|
80,000
|
Income tax expense
|
23,000
|
|
Accumulated depreciation-
|
|
|
Net income
|
$50,000
|
|
equipment
|
-15,000
|
-20,000
|
|
|
|
|
Total
|
$336,000
|
$302,000
|
|
|
|
|
|
|
|
|
Accounts payable
|
$35,000
|
$39,000
|
|
|
|
Bonds payable
|
0
|
100,000
|
|
|
|
Common stock
|
200,000
|
100,000
|
|
|
|
Retained earnings
|
101,000
|
63,000
|
|
|
|
|
Total
|
$336,000
|
$302,000
|
|
Additional information:
In 2006,
(a) Bryers declared and paid a cash dividend of $12,000.
(b) The company converted $100,000 of bonds into common stock.
(c) Equipment with a cost of $22,000 and a book value of $12,000 was sold for $10,000. Land was acquired for cash.
(d) Prepaid expenses pertain to operating expenses; accounts payable pertains to merchan-dise purchases.
Instructions
Prepare a statement of cash flows in proper form for 2006, using the indirect or the direct method, your choice.