Problem - The financial statements of Meenan Company appear below:
MEENAN COMPANY Comparative Balance Sheet December 31
2010 2009
Assets
Cash $ 38,000 $ 23,000
Accounts receivable 26,000 34,000
Merchandise inventory 30,000 15,000
Property, plant, and equipment 50,000 78,000
Accumulated depreciation (20,000) (24,000)
Total $124,000 $126,000
Liabilities and Stockholders' Equity
Accounts payable $ 17,000 $ 23,000
Income taxes payable 13,000 8,000
Bonds payable 7,000 33,000
Common stock 41,000 24,000
Retained earnings 46,000 38,000
Total $124,000 $126,000
MEENAN COMPANY
Income Statement
For the Year Ended December 31, 2010
Sales $400,000
Cost of goods sold 280,000
Gross profit 120,000
Operating expenses 46,000
Income from operations 74,000
Interest expense 4,000
Income before income taxes 70,000
Income tax expense 21,000
Net income $ 49,000
The following additional data were provided:
1. Dividends declared and paid were $41,000.
2. During the year, equipment was sold for $15,000 cash. This equipment cost $28,000 originally and had a book value of $15,000 at the time of sale.
3. All depreciation expense is in the operating expenses.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions - Prepare a statement of cash flows for Meenan Company using the indirect method.