Problem:
Pat Metheny Company
Comparative Balance Sheet
as of December 31, 2006 and 2007
|
|
2008 |
|
2007 |
| Cash |
|
1,800 |
|
1,150 |
| Receivables |
|
1,750 |
|
1,300 |
| Inventory |
|
1,600 |
|
1,900 |
| Plant assets |
|
1,900 |
|
1,700 |
| Accumulated depreciation |
|
(1,200) |
|
(1,170) |
| Long- term investments (held to maturity |
|
1,300 |
|
1,420 |
|
|
7,150 |
|
6,300 |
| Accounts payable |
|
1,200 |
|
900 |
| accrued liabilities |
|
200 |
|
250 |
| Bond Payable |
|
1,400 |
|
1,550 |
| Capital stock |
|
1,900 |
|
1,700 |
| Retained earnings |
|
2,450 |
|
1,900 |
|
|
7,150 |
|
6,300 |
Pat Metheny Company
Income Statement
For the Year ended December 31, 2008
| Sales |
|
6900 |
| Cost of good sold |
|
4700 |
| Gross Margin |
|
2200 |
| Selling and administrative expense |
|
930 |
| Income from operations |
|
1270 |
| Other revenues and gains |
|
|
| Gain on sale of investments |
|
80 |
| Income before Tax |
|
1350 |
| Income tax expense |
|
540 |
| Net income |
|
810 |
| Cash dividends |
|
260 |
| Income retained in business |
|
550 |
Additional information:
During the year, $70 of the common stock was issued in exchange for plant assete. No plant assets were sold in 2008.
Prepare a statement of cash flows using the indirect method as well as a statement of cash flows using the direct method, do not prepare a reconciliation schedule.