cash flows 1 461054

Galley Corp., 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 if inventory are on credit, (4) all debits to Accounts payable reflect cash payments for inventory, (5) Other expenses are all 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 statements follow.

GALLEY CORPORATION

Comparative Balance Sheets

December 31, 2011 and 2010

2011 2010

Assets

Cash $174,000 $117,000

Accounts receivable 93,000 81,000

Merchandise inventory 609,000 534,000

Equipment 333,000 297,000

Accum. depreciation equip (156,000) (102,000)

Total assets $1,053,000 927,000

Liabilities and Equity

Accounts payable $69,000 $96,000

Income taxes payable 27,000 24,000

Common stock, $2 par value 582,000 558,000

Paid in capital in excess of par value, common stock 198,000 162,000

Retained earnings 177,000 87,000

Total liabilities and equity $1,053,000 $927,000

GALLEY CORPORATION

Income Statement

For year Ended December 31, 2011

Sales $1,992,000

Cost of goods sold 1,194,000

Gross Profit 798,000

Operating Expenses

Depreciation Expense $54,000

Other Expenses 501,000 555,000

Income before taxes 243,000

Income tax expense 42,000

Net income $201,000

Additional Information on Year 2011 Transactions

a. purchased equipment for $36,000 cash

b. Issued 12,000 shares of common stock for $5 cash per share

c. Declared and paid $111,000 in cash dividends

Required

Prepare and complete statement of cash inflows and cash outflows from operating activities according to the indirect method.