Statement of cash flows-direct method
The comparative balance sheet of Rowe Products Inc. for December 31, 2013 and 2012, is as follows:
|
Dec. 31, 2013
|
Dec. 31, 2012
|
|
Assets
|
|
|
|
Cash
|
$ 772,080
|
$ 815,280
|
|
Accounts receivable (net)
|
680,160
|
656,880
|
|
Inventories
|
1,213,200
|
1,179,360
|
|
Investments
|
0
|
288,000
|
|
Land
|
624,000
|
0
|
|
Equipment
|
1,056,000
|
816,000
|
|
Accumulated depreciation
|
(293,280)
|
(240,480)
|
|
$4,052,160
|
$3,515,040
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Accounts payable (merchandise creditors)
|
$ 926,160
|
$ 898,080
|
|
Accrued expenses payable (operating expenses)
|
76,080
|
84,960
|
|
Dividends payable
|
10,560
|
7,680
|
|
Common stock, $10 par
|
177,600
|
38,400
|
|
Paid-in capital in excess of par-common stock
|
369,600
|
230,400
|
|
Retained earnings
|
2,492,160
|
2,255,520
|
|
$4,052,160
|
$3,515,040
|
The income statement for the year ended December 31, 2012, is as follows:
|
Sales
|
|
$7,176,000
|
|
Cost of merchandise sold
|
|
2,942,400
|
|
Gross profit
|
|
$4,233,600
|
|
Operating expenses:
|
|
|
|
Depreciation expense
|
$ 52,800
|
|
|
Other operating expenses
|
3,720,000
|
|
|
Total operating expenses
|
|
3,772,800
|
|
Operating income
|
|
$ 460,800
|
|
Other expense:
|
|
|
|
Loss on sale of investments
|
|
(76,800)
|
|
Income before income tax
|
|
$ 384,000
|
|
Income tax expense
|
|
123,360
|
|
Net income
|
|
$ 260,640
|
The following additional information was taken from the records:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $211,200 cash.
d. The common stock was issued for cash.
e. There was a $24,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.