Problem:
| Income statement |
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2010 |
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2009 |
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| Sales |
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$880,000.00 |
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$801,000.00 |
| Cost of goods sold |
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-$590,000.00 |
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-$490,000.00 |
| Gross profit |
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$290,000.00 |
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$311,000.00 |
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| Gain on disposal of assets |
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$5,000.00 |
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| Loss on sale of long term investments |
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-$4,000.00 |
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| Depreciation expenses |
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-$33,000.00 |
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-$29,000.00 |
| Operating Expenses |
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-$206,000.00 |
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-$232,000.00 |
| Interest Expenses |
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-$10,000.00 |
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-$14,000.00 |
| Income Tax expenses |
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-$18,000.00 |
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-$15,000.00 |
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| Net Income |
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$24,000.00 |
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$21,000.00 |
| Balance Sheet |
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2010 |
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2009 |
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| Cash and equivalents |
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$102,000.00 |
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$92,000.00 |
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$10,000.00 |
| Accounts receivable |
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$61,000.00 |
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$65,000.00 |
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-$4,000.00 |
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| Inventory |
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$320,000.00 |
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$340,000.00 |
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-$20,000.00 |
| Long-term investments |
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$72,000.00 |
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$100,000.00 |
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-$28,000.00 |
| Property, Plant & Equipment |
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$450,000.00 |
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$263,000.00 |
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$187,000.00 |
| Accumulated depreciation |
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-$93,000.00 |
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-$110,000.00 |
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$17,000.00 |
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$912,000.00 |
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$750,000.00 |
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$162,000.00 |
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| Accounts payable |
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$130,000.00 |
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$124,000.00 |
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$6,000.00 |
| Interest payable |
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$10,000.00 |
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$12,000.00 |
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-$2,000.00 |
| Income taxes payable |
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$23,000.00 |
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$8,000.00 |
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$15,000.00 |
| Long-term debt |
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$65,000.00 |
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$20,000.00 |
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$45,000.00 |
| Common shares, no par value |
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$360,000.00 |
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$250,000.00 |
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$110,000.00 |
| Preferred shares, 4%, cumulative, no par value |
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$120,000.00 |
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$150,000.00 |
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-$30,000.00 |
| Retained earnings |
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$204,000.00 |
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$186,000.00 |
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$18,000.00 |
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$912,000.00 |
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$750,000.00 |
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$162,000.00 |
During 2010, they sold capital assets with a net book value of $51,000 for $56,000.
Instructions:
Q1. Prepare a cash flow statement for the year ended December 31st, 2010 using the direct approach to report the operating activities.
Q2. Prepare the operating section using the indirect approach.