Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2012.
ANDREWS INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2012 AND 2011 |
|
|
12/31/12 |
|
12/31/11 |
| Cash |
|
$5,890 |
|
|
$8,992 |
|
| Accounts receivable |
|
62,200 |
|
|
49,131 |
|
| Short-term investments (available-for-sale) |
|
34,888 |
|
|
18,110 |
|
| Inventory |
|
39,922 |
|
|
60,138 |
|
| Prepaid rent |
|
4,991 |
|
|
4,047 |
|
| Equipment |
|
153,710 |
|
|
128,060 |
|
| Accumulated depr."equipment |
|
(34,823 |
) |
|
(25,013 |
) |
| Copyrights |
|
46,037 |
|
|
49,864 |
|
| Total assets |
|
$312,815 |
|
|
$293,329 |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$45,929 |
|
|
$42,103 |
|
| Income taxes payable |
|
4,149 |
|
|
5,970 |
|
| Salaries and wages payable |
|
7,871 |
|
|
3,817 |
|
| Short-term loans payable |
|
7,962 |
|
|
9,818 |
|
| Long-term loans payable |
|
60,143 |
|
|
67,132 |
|
| Common stock, $10 par |
|
104,300 |
|
|
104,300 |
|
| Contributed capital, common stock |
|
28,790 |
|
|
28,790 |
|
| Retained earnings |
|
53,671 |
|
|
31,399 |
|
| Total liabilities & stockholders' equity |
|
$312,815 |
|
|
$293,329 |
|
ANDREWS INC.
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2012 |
| Sales |
|
|
|
$339,167 |
| Cost of goods sold |
|
|
|
175,290 |
| Gross margin |
|
|
|
163,877 |
| Operating expenses |
|
|
|
119,690 |
| Operating income |
|
|
|
44,187 |
| Interest expense |
|
$11,436 |
|
|
| Gain on sale of equipment |
|
2,094 |
|
9,342 |
| Income before tax |
|
|
|
34,845 |
| Income tax expense |
|
|
|
6,792 |
| Net income |
|
|
|
$28,053 |
1. Dividends in the amount of $5,781 were declared and paid during 2012.
2. Depreciation expense and amortization expense are included in operating expenses.
3. No unrealized gains or losses have occurred on the investments during the year.
4. Equipment that had a cost of $31,120 and was 70% depreciated was sold during 2012.
Prepare a statement of cash flows using the direct method.