Question - SCF-Indirect Method
Andrews Inc., a greeting card company, had the following statements prepared as of December 31, 2010.
|
ANDREWS INC. Comparative Balance Sheet as of December 31, 2010 and 2009
|
|
12/31/10
|
12/31/09
|
|
Cash
|
$ 5,981
|
$ 9,008
|
|
Accounts Receivable
|
62,124
|
48,810
|
|
Short-term investments (Available-for-sale)
|
34,834
|
18,083
|
|
Inventories
|
39,952
|
60,125
|
|
Prepaid rent
|
4,877
|
4,180
|
|
Printing equipment
|
153,030
|
129,250
|
|
Accumulated depr.-equipment
|
(34,899)
|
(24,875)
|
|
Copyrights
|
45,764
|
50,582
|
|
Total assets
|
$311,663
|
$295,163
|
|
|
|
|
Accounts payable
|
$ 45,834
|
$ 41,998
|
|
Income taxes payable
|
3,999
|
6,191
|
|
Wages payable
|
7,666
|
4,270
|
|
Short-term loans payable
|
8,016
|
9,931
|
|
Long-term loans payable
|
59,989
|
66,890
|
|
Common stock, $10 par
|
100,460
|
100,460
|
|
Contributed capital, common stock
|
29,870
|
29,870
|
|
Retained earnings
|
55,829
|
35,553
|
|
Total liabilities & equity
|
$311,663
|
$295,163
|
|
ANDREWS INC. Income Statement For the Year Ended December 31, 2010
|
|
Sales
|
|
$337,397
|
|
Cost of goods sold
|
|
175,640
|
|
Gross Margin
|
|
161,757
|
|
Operating expenses
|
|
119,170
|
|
Operating income
|
|
42,587
|
|
Interest expense
|
$11,466
|
|
|
Gain on sale of equipment
|
1,743
|
9,723
|
|
Income before tax
|
|
32,864
|
|
Income tax expense
|
|
6,603
|
|
Net income
|
|
$ 26,261
|
Additional information:
1. Dividends in the amount of $5,985 were declared and paid during 2010.
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 $29,200 and was 70% depreciated was sold during 2010.
Instructions - Prepare a statement of cash flows using the indirect method.