Prepare a complete statement of cash flows using a


Taurasi Company, a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company's balance sheets and income statement follow.

TAURASI COMAPANY

Comparative Balance Sheets

December 31,2011 and 2010

 

2011

2010

Assets

 

 

Cash

$ 53,925

$ 31,800

Accounts receivable

19,425

23,250

Merchandise inventory

175,350

139,875

Equipment

105,450

76,500

Accumdepreciation-Equipment

(48,300)

(30,600)

Total assets

$305,850

$240,825

Liabilities and Equity

 

 

Accounts payable

$ 38,475

$ 35,625

Income taxes payable

4,500

6,750

Common stock, $2 par value

165,000

150,000

Paid-in capital in excess

 

 

of par, common stock

42,000

15,000

Retained earnings

55,875

33,450

Total liabilities and equity

$305,850

$240,825

 

TAURASI COMPANY
Income Statement
 For Year Ended December 31, 2011

Sales

 

$609,750

Cost of goods sold

 

279,000

Gross profit

 

330,750

Operating expenses

$17,700

 

Depreciation expense

179,775

 

Other expenses

 

197,475

Income before taxes

 

133,275

Income taxes expense

 

44,850

Net income

 

$88,425

Additional Information on Year 2011 Transactions

a. Purchased equipment for $28,950 cash.

b. Issued 3,000 shares of common stock for $14 cash per share.

c. Declared and paid $66,000 of cash dividends.

Refer to the information reported about Taurasi Company in Problem 16-4B.

Required

Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report operating activities under the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.

a. Net income was $88,425.

b. Accounts receivable decreased.

c. Merchandise inventory increased.

d. Accounts payable increased.

e. Income taxes payable decreased.

f. Depreciation expense was $17,700.

g. Purchased equipment for $28,950 cash.

h. Issued 3,000 shares at $14 cash per share.

i. Declared and paid $66,000 of cash dividends.

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Accounting Basics: Prepare a complete statement of cash flows using a
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