29 Jun Question Problem 14A – 5 Prepare a Statement of Cash Flow
Question
Problem 14A – 5 Prepare a Statement of Cash Flows.
A comparative balance sheet and income statement for Eaton Company follows:
Eaton Company
Comparative Balance Sheet
December 31, 2011 and 2011
2011
2010
Assets
Current Assets:
Cash
$4
$11
Accounts receivable
$310
$230
Inventory
$160
$195
Prepaid expenses
$8
$6
Total current Assets
$482
$442
Plant and equipment
$500
$420
Less: Accumulated Depreciation
$85
$70
Net plant and equipment
$415
$350
Long term investments
$31
$38
Total Assets
$928
$830
Liabilities and Stockholder’s equity
Current Liabilities
Accounts Payable
$300
$225
Accrued Liabilities
$70
$80
Income taxes payable
$71
$63
Total current Liabilities
$441
$368
Bonds Payable
$195
$170
Total Liabilities
$636
$538
Stockholder’s equity
Common Stock
$160
$200
Retained earnings
$132
$92
Total Stockholder’s equity
$292
$292
Total Liabilities and Stockholder’s equity
$928
$830
Eaton Company
Income Statement
For the year ended December 31, 2011
Sales
$750
Cost of goods sold
$450
Gross Margin
$300
Selling and administrative expenses
$223
Net operating income
$77
Non-operating items
Gain on sales of investments
$5
Loss on sale of equipment
-$2
$3
Income before taxes
$80
Income tax
$24
Net Income
$56
During 2011, Eaton sold some equipment for $18 that had cost $30 and on which there was accumulated depreciation of $10. In addition, the company sold long term investments for $12 that had cost $7 when purchased several years ago. A cash dividend was paid during 2011 and the company repurchased $40 of its stock. Eaton did not retire any bonds during 2011.
Required:
1. Using the direct method, determine the net cash provided by operating activities for 2011.
2. Using the information in (1) above, along with an analysis of remaining balance sheet accounts, prepare a statement of cash flows for 2011.
Problem 14 – 8 Prepare a Statement of Cash Flows.
A comparative balance sheet and income statement for Eaton Company follows:
Eaton Company
Comparative Balance Sheet
December 31, 2011 and 2011
2011
2010
Assets
Current Assets:
Cash
$4
$11
Accounts receivable
$310
$230
Inventory
$160
$195
Prepaid expenses
$8
$6
Total current Assets
$482
$442
Plant and equipment
$500
$420
Less: Accumulated Depreciation
$85
$70
Net plant and equipment
$415
$350
Long term investments
$31
$38
Total Assets
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