Use the information below and on page 777 to prepare a statement of cash flows using the indirect method.
Reynolds Company
Comparative Balance Sheets
December 31
|
|
|
Change
|
|
Assets
|
2012
|
2011
|
Increase/Decrease
|
|
Cash
|
$ 54,000
|
$ 37,000
|
$ 17,000 Increase
|
|
Accounts receivable
|
68,000
|
26,000
|
42,000 Increase
|
|
Inventory
|
54,000
|
-0-
|
54,000 Increase
|
|
Prepaid expenses
|
4,000
|
6,000
|
2,000 Decrease
|
|
Land
|
45,000
|
70,000
|
25,000 Decrease
|
|
Buildings
|
200,000
|
200,000
|
-0-
|
|
Accumulated depreciation-buildings
|
(21,000)
|
(11,000)
|
10,000 Increase
|
|
Equipment
|
193,000
|
68,000
|
125,000 Increase
|
|
Accumulated depreciation-equipment
|
(28,000)
|
(10,000)
|
18,000 Increase
|
|
Totals
|
$569,000
|
$386,000
|
|
Liabilities and Stockholders' Equity
|
Accounts payable
|
$ 23,000
|
$ 40,000
|
$ 17,000 Decrease
|
|
Accrued expenses payable
|
10,000
|
-0-
|
10,000 Increase
|
|
Bonds payable
|
110,000
|
150,000
|
40,000 Decrease
|
|
Common stock ($1 par)
|
220,000
|
60,000
|
160,000 Increase
|
|
Retained earnings
|
206,000
|
136,000
|
70,000 Increase
|
|
Totals
|
$569,000
|
$386,000
|
|
Reynolds Company
Income Statement
For the Year Ended December 31, 2012
|
Sales revenue
|
|
$890,000
|
|
Cost of goods sold
|
$465,000
|
|
|
Operating expenses
|
221,000
|
|
|
Interest expense
|
12,000
|
|
|
Loss on sale of equipment
|
2,000
|
700,000
|
|
Income before income taxes
|
|
190,000
|
|
Income tax expense
|
|
65,000
|
|
Net income
|
|
$125,000
|
Additional information:
1. Operating expenses include depreciation expense of $33,000 and charges from prepaid expenses of $2,000.
2. Land was sold at its book value for cash.
3. Cash dividends of $55,000 were declared and paid in 2012.
4. Interest expense of $12,000 was paid in cash.
5. Equipment with a cost of $166,000 was purchased for cash. Equipment with a cost of $41,000 and a book value of $36,000 was sold for $34,000 cash.
6. Bonds of $10,000 were redeemed at their face value for cash. Bonds of $30,000 were converted into common stock.
7. Common stock ($1 par) of $130,000 was issued for cash.
8. Accounts payable pertain to merchandise suppliers.