Question

Statement of Cash Flows (Direct Method) Dair Company's income statement and comparative balance sheets follow. DAIR COMPANY Income Statement For Year Ended December 31, 2011 Sales $ 700,000 Cost of goods sold $ 440,000 Wages and other operating expenses 95,000 Depreciation expense 22,000 Amortization expense 7,000 Interest expense 6,000 Income tax expense 34,000 Loss on bond retirement 5,000 609,000 Net income $91,000 DAIR COMPANY Balance Sheets Dec. 31, 2011 Dec. 31, 2010 Assets Cash $ 45,000 53,000 103,000 12,000 358,000 (87,000) 43,000 $ 527,000 $ 22,000 48,000 112,000 11,000 329,000 (84,000) 50,000 $ 488,000 Accounts receivable Inventory Prepaid expenses Plant assets Accumulated depreciation Intangible assets Total assets Liabilities and Stockholders' Equity Accounts payable Interest payable Income tax payable Bonds payable Common stock Retained earnings Total liabilities and equity $ 33,000 2,000 3,000 65,000 252,000 172,000 $ 527,000 $ 26,000 7,000 8,000 117,000 228,000 102,000 $488,000 During 2011, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. Also in 2011, new

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Dair Company	Amount $		Colson Company
Cash Received from customer			Cash Flow Direct Method	Amount $	Amount $
Opening Accounts Receivable	48,000.00		Cash Receipts from
Add: Sales	700,000.00		Cash Received from sale	695,000.00		See A
Less: Closing Accounts Receivable	53,000.00		Total cash inflows		695,000.00
Cash Received from customer	695,000.00	A	Cash paid for Inventory purchased	424,000.00		See C
			Cash paid for Operating Expense	96,000.00		See D
Goods purchased			Interest paid	11,000.00		See E
Cost of goods sold	440,000.00		Income Tax paid	39,000.00		See F
Add: Closing Inventory	103,000.00		Total cash outflows		570,000.00
Less: Opening Inventory	112,000.00		Net Cash inflow from operating activities		125,000.00	J
Inventory purchased	431,000.00	B
			Cash Flow from Investing Activities
Cash paid to vendors			Equipment sold	17,000.00
Opening Accounts Payable	26,000.00		Net Cash inflow from Investing Activities		17,000.00	K
Add: Purchases	431,000.00	See B
Less: Closing Accounts Payable	33,000.00		Cash Flow from Financing Activities
Cash paid to vendors	424,000.00	C	Bonds Payable retired	(122,000.00)		See G
			Common stock issued during the year	24,000.00		See J
Cash paid for wages and operating Expense			Dividends paid	(21,000.00)
Wages and operating Expense	95,000.00		Net Cash inflow form Financing Activities		(119,000.00)	L
Add: Prepaid Expense- closing	12,000.00
Less: Prepaid Expense- opening	11,000.00		Net Increase in cash		23,000.00	M=J+K+L
Cash paid for wages and operating Expense	96,000.00	D	Add: Beginning Cash Balance		22,000.00	N
			Ending cash Balance		45,000.00	O=M+N
Interest paid
Interest expense	6,000.00
Add: Interest Payable- opening	7,000.00
Less: Interest Payable- closing	2,000.00
Interest paid	11,000.00	E
Income Tax paid
Income Tax expense	34,000.00
Add: Income Tax Payable- opening	8,000.00
Less: Income Tax Payable- closing	3,000.00
Income Tax paid	39,000.00	F
Bonds Payable retired
Book Value	117,000.00
Add: Loss on retirement	5,000.00
Bonds Payable retired	122,000.00	G
Common stock issued during the year
Common stock- closing	252,000.00	H
Common stock- opening	228,000.00	I
Common stock issued during the year	24,000.00	J=H-I