Following is information taken from the accounting records of Kagawa Company at the end of 2009.
- Net sales, $660,000
- Operating Income (from discontinued operations) $64,000
- Cost of Goods Sold, $370,000
- Gain on sale of assets (from discontinued operations) $55,000
- Operating expenses $134,000
- Flood loss $167,000
- Kagawa had 150,000 shares of common stock issued and outstanding throughout the year
Kagawa's effective tax rate is 40 percent and is based in an area that does not normally experience floods. Kagawa's taxable income from the tax return is $100,000.
Prepare an income statement for Kagawa Company for 2009, including an earnings-per-share section.
Statement of Cash Flows
Following are the line items included in the 2009 statement of cash flows prepared by the Nine Muses, Inc. (amounts are in thousands)
Proceeds from saleof long-term investments - $14,077
Depreciation expense - 8,275
Increase in accounts receivable - 2,396
Increase in accounts payable - 6,590
Purchase of long-term investments - 29,939
Net Income - 22,214
Increase in accrued salaries - 4,072
Proceeds from sale of property and equipment - 2,468
Increase in inventories - 7,320
Issuance of Long-term notes - 126
Reductions of long-term debt - 572
Gain on disposal of long-term assets - 415
Issuance of common stock - 10,000
Cash and cash equivalents, beginning of the year - 21,750
Increase in income taxes payable - 5,608
Acquisitions of property and equipment - 31,083
Net increase (decrease) in cash and cash equivalents - ?
Cash and cash equivalents, end of year - ?
Prepare the Nine Muses' statement of cash flows using the indirect method.