You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2012. The balance sheet accounts at the beginning and end of the year are shown below.
|
|
Dec. 31,
2012
|
|
Dec. 31,
2011
|
|
Increase or
(Decrease)
|
| Cash |
|
$538,292
|
|
$577,226
|
|
|
($38,934
|
)
|
| Accounts receivable |
|
909,274
|
|
683,761
|
|
|
225,513
|
|
| Inventory |
|
1,436,673
|
|
1,181,570
|
|
|
255,103
|
|
| Prepaid expenses |
|
23,244
|
|
15,496
|
|
|
7,748
|
|
| Investment in subsidiary |
|
214,039
|
|
0
|
|
|
214,039
|
|
| Cash surrender value of life insurance |
|
4,463
|
|
3,487
|
|
|
976
|
|
| Machinery |
|
400,959
|
|
368,030
|
|
|
32,929
|
|
| Buildings |
|
1,036,682
|
|
790,102
|
|
|
246,580
|
|
| Land |
|
101,693
|
|
101,693
|
|
|
0
|
|
| Patents |
|
133,653
|
|
123,968
|
|
|
9,685
|
|
| Copyrights |
|
77,480
|
|
96,850
|
|
|
(19,370
|
)
|
| Bond discount and issue cost |
|
8,720
|
|
0
|
|
|
8,720
|
|
|
|
$4,885,172
|
|
$3,942,183
|
|
|
$942,989
|
|
|
|
|
|
|
|
|
|
|
| Accrued taxes payable |
|
$174,815
|
|
$154,186
|
|
|
$20,629
|
|
| Accounts payable |
|
579,705
|
|
542,360
|
|
|
37,345
|
|
| Dividends payable |
|
135,590
|
|
0
|
|
|
135,590
|
|
| Bonds payable-8% |
|
242,125
|
|
0
|
|
|
242,125
|
|
| Bonds payable-12% |
|
0
|
|
193,700
|
|
|
(193,700
|
)
|
| Allowance for doubtful accounts |
|
68,376
|
|
77,480
|
|
|
(9,104
|
)
|
| Accumulated depreciation-buildings |
|
821,288
|
|
774,800
|
|
|
46,488
|
|
| Accumulated depreciation-machinery |
|
335,101
|
|
251,810
|
|
|
83,291
|
|
| Premium on bonds payable |
|
0
|
|
4,649
|
|
|
(4,649
|
)
|
| Common stock-no par |
|
2,278,299
|
|
2,814,848
|
|
|
(536,549
|
)
|
| Paid-in capital in excess of par-common stock |
|
211,133
|
|
0
|
|
|
211,133
|
|
| Retained earnings-unappropriated |
|
38,740
|
|
(871,650
|
)
|
|
910,390
|
|
|
|
$4,885,172
|
|
$3,942,183
|
|
|
$942,989
|
|
|
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2012
|
| January |
1, 2012 |
|
Balance (deficit) |
|
$(871,650
|
)
|
| March |
31, 2012 |
|
Net income for first quarter of 2012 |
|
48,425
|
|
| April |
1, 2012 |
|
Transfer from paid-in capital |
|
823,225
|
|
|
|
|
Balance |
|
0
|
|
| December |
31, 2012 |
|
Net income for last three quarters of 2012 |
|
174,330
|
|
|
|
|
Dividend declared-payable January 21, 2013 |
|
(135,590
|
)
|
|
|
|
Balance |
|
$38,740
|
|
Your working papers from the audit contain the following information:
| 1. |
|
On April 1, 2012, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock. |
| 2. |
|
On November 1, 2012, 57,335 shares of no-par stock were sold for $497,809. The board of directors voted to regard $5 per share as stated capital. |
| 3. |
|
A patent was purchased for $29,055. |
| 4. |
|
During the year, machinery that had a cost basis of $31,767 and on which there was accumulated depreciation of $10,072 was sold for $17,433. No other plant assets were sold during the year. |
| 5. |
|
The 12%, 20-year bonds were dated and issued on January 2, 2000. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were retired at 100.9 plus accrued interest on March 31, 2012. |
| 6. |
|
The 8%, 40-year bonds were dated January 1, 2012, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,625. |
| 7. |
|
Alexander Corporation acquired 70% control in Crimson Company on January 2, 2012, for $193,700. The income statement of Crimson Company for 2012 shows a net income of $29,055. |
| 8. |
|
Extraordinary repairs to buildings of $13,946 were charged to Accumulated Depreciation-Buildings. |
| 9. |
|
Interest paid in 2012 was $20,339 and income taxes paid were $65,858. |
From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. If an amount reduces the account balance then enter with negative sign.)