Assignment:
(SCF—Indirect Method) Condensed financial data of Pat Metheny Company for 2005 and 2004 are presented below.
PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2005 AND 2004
2005 2004
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
Bonds 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, 2005
Sales $6,900
Cost of goods sold 4,700
Gross margin 2,200
Selling and administrative expense 930
Income from operations 1,270
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,350
Income tax expense 540
Net income 810
Cash dividends 260
Income retained in business $ 550
Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2005.
Instructions:
Prepare a statement of cash flows using the indirect method.