Question: Refer to the data in Exercise. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2011.
Exercise: Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended June 30, 2011, using the indirect method, and (2) compute the company's cash flow on total assets ratio for its fiscal year 2011.
Additional Information: a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $58,600 cash.
d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.
e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.