corporate income statement 503490

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.