Problem - Given the following information:
Sales $242,807
Gain on sale of available for sale $2,400
Equity in earnings of 30% owned company $5,880
Gain on sale of land $10,700
Total $261,787
Cost of Sales $138,407
General and Admin expenses $25,010
Depreciation $1,250
Interest expense $1,150
Income taxes $34,952
Net Income $61,018
The following data presents the difference between last year and the current year balances.
Cash $21,100
Available for sale securities $(9,200)
Accts Rec. $25,000
Allow for uncollectible accounts $ 0
Inventory $17,500
Investment in 30% owned company $5,880
Land $(21,300)
Building $ 0
Equipment $81,500
Less Accum Depreciation $(1,250)
Total Assets $119,230
Accounts Payable $(3,890)
Income taxes payable $4,616
Bonds payable $65,000
Less Unamortized discount $150
Deferred tax liability $336
Preferred stock $(30,000)
Common stock $30,000
Retained earnings $53,018
Total Liabilities and equity $119,230
Additional Information:
a. On Jan. 8, the company sold marketable equity securities for cash. The original cost of the securities is $9,200.
b. Only July 17th, 3 acres of land were sold for cash of $32,000.
c. On Sept. 3, the company purchased equipment for cash.
d. On Nov. 10, bonds payable were issued by the company, at par, for cash.
e. On Dec. 15, the company declared and paid an $8,000 dividend to common stockholders.
f. General and Administrative expenses include $3,000 of bad debt expense.
f. No dividends were received during the year from the 30% owned investee.
h. The company's preferred stock is convertible into common stock at a rate of one share of preferred stock for two shares of common stock. The preferred stock and common stock have par values of $2 and $1, respectively.
i. For purposes of the statement of cash flows, the company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Required:
a. Prepare a Statement of Cash Flows in good form using the above information and the indirect method.
b. Prepare the Net Cash Provided by Operating Activities section, using the above information, using the direct method.