Problem - The accounting staff of Harris Company has assembled the following information for the year ended December 31, 2011:
Cash Sales - $800,000
Credit Sales - 2,500,000
Collections of accounts receivable - 2,200,000
Cash transferred from the money market fund to the general bank account - 250,000
Interest and dividends received - 100,000
Purchases (all on account) - 1,800,000
Payments on accounts payable to merchandise suppliers - 1,500,000
Cash payments for operating expenses - 1,050,000
Interest paid - 180,000
Income taxes paid - 95,000
Loans made to borrowers - 500,000
Collection on loans (excluding receipts of interest) - 260,000
Cash paid to acquire plant assets - 3,100,000
Book value of plant assets sold - 660,000
Loss on sales of plant assets - 80,000
Proceeds from issuing bonds payable - 2,500,000
Dividends paid - 120,000
Cash and cash equivalents, Jan. 1 - 489,000
Instructions -
Prepare a statement of cash flows. Place brackets around amounts representing cash outflows. Use the direct method of reporting cash flows from operating activities.
Some of the items above will be listed in your statement without change. However, you will have to combine given information to compute the amounts of (1) collections from customers, (2) cash paid to suppliers and employees, and (3) proceeds from sales of plant assets. (Hint: Not every item listed is used in preparing a statement of cash flows.)