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UMLAUF COMPANY
Balance Sheets
December 31,2011 and 2010
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2011
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2010
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Assets
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Cash
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$ 43,050
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$ 23,925
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Accounts receivable
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34,125
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39,825
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Merchandise inventory
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156,000
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146,475
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Prepaid expenses
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3,600
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1,650
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Equipment
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135,825
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146,700
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Accumdepreciation-Equipment .
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(61,950)
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(47,550)
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Total assets
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$310,650
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$311,025
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Liabilities and Equity
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Accounts payable
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$ 28,800
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$ 33,750
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Income taxes payable
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5,100
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4,425
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Dividends payable
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0
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4,500
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Bonds payable
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0
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37,500
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Common stock, $10 par
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168,750
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168,750
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Retained earnings
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108,000
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62,100
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Total liabilities and equity
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$310,650
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$311,025
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UMLAUF COMPANY
Income Statement
For Year Ended December 31,2011
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Sales
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$446,100
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Cost of goods sold
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$222,300
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Other operating expenses
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120,300
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Depreciation expense
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25,500
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(368,100)
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78,000
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Other gains (losses)
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Loss on sale of equipment
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3,300
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Loss on retirement of bonds
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825
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(4,125) 73,875
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Income before taxes
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Income taxes expense
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(13,725)
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Net income
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$ 60,150
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Additional Information
a. Equipment costing $21,375 with accumulated depreciation of $11,100 is sold for cash.
b. Equipment purchases are for cash.
c. Accumulated Depreciation is affected by depreciation expense and the sale of equipment.
d. The balance of Retained Earnings is affected by dividend declarations and net income.
e. All sales are made on credit.
f. All merchandise inventory purchases are on credit.
g. Accounts Payable balances result from merchandise inventory purchases.
h. Prepaid expenses relate to "other operating expenses."
Required
1. Prepare a statement of cash flows using the indirect method for year 2011.
2. Prepare a statement of cash flows using the direct method for year 2011.