Problems: Financial data of Fancy Footwork Company for 2016 and 2015 are presented below.
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FANCY FOOTWORK COMPANY
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COMPARATIVE BALANCE SHEET
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AS OF DECEMBER 31, 2016 AND 2015
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2016
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2015
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Cash
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$260,000
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$230,000
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Receivables
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$156,000
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$120,000
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Inventory
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$180,000
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$220,000
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Plant assets
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$160,000
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$135,000
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Accumulated depreciation
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$(80,000)
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$(76,000)
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Long-term investments (held-to-maturity)
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$80,000
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$93,000
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$756,000
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$722,000
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Accounts payable
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$ 135,000
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$ 122,000
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Accrued liabilities
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$ 30,000
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$33,100
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Bonds payable
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$ 135,000
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$ 166,000
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Common stock
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$ 180,000
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$165,000
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Retained earnings
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$ 276,000
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$ 235,900
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$ 756,000
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$722,000
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FANCY FOOTWORK COMPANY
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INCOME STATEMENT
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For the year ended Dec 31, 2016
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Sales
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750000
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Cost of Goods Sold
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530000
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Gross Margin
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220000
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Selling and administrative expenses
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106000
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Income from Operations
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114000
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Other revenues and gains
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Gain on sale of investments
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7000
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Income before tax
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121000
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Income tax expense
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48400
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Net Income
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72600
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Additional information: During the year, $9000 of common stock was issued in exchange for plant assets. No plant assets were sold in 2015. Cash dividends were $32500.
Required: A) Prepare a statement of cash flows using the indirect method.
B) Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)