Using financial statements to prepare a statement of cash flows— Indirect method
The following financial statements were drawn from the records of Healthy Products Co.
Balance Sheets As of December 31 | ||
| 2012 | 2011 |
Assets |
|
|
Cash | $16,120 | $ 1,940 |
Accounts receivable | 2,400 | 2,000 |
Inventory | 2,000 | 2,600 |
Equipment | 13,700 | 17,100 |
Accumulated depreciation—equipment | (11,300) | (12,950) |
Land | 13,000 | 8,000 |
Total assets | $35,920 | $18,690 |
Liabilities and stockholders’ equity |
|
|
Accounts payable (inventory) | $3,600 | $ 2,400 |
Long-term debt | 3,200 | 4,000 |
Common stock | 17,000 | 10,000 |
Retained earnings | 12,120 | 2,290 |
Total liabilities and stockholders’ equity | $35,920 | $18,690 |
Income Statement For the Ended December31,2012 | |
Sales revenue | $17,480 |
Cost of goods sold | (6,200) |
Gross margin | 11,280 |
Depreciation expense | (1,750) |
Operating income | 9,530 |
Gain on sale of equipment | 1,800 |
Loss on disposal of land | (600) |
Net income | $10,730 |
Additional Data
1. During 2012, the company sold equipment for $6,800; it had originally cost $8,400. Accumulated depreciation on this equipment was $3,400 at the time of the sale. Also, the company purchased equipment for $5,000 cash.
2. The company sold land that had cost $2,000. This land was sold for $1,400, resulting in the recognition of a $600 loss. Also, common stock was issued in exchange for title to land that was valued at $7,000 at the time of exchange.
3. Paid dividends of $900.
Required
Prepare a statement of cash flows using the indirect method.
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