Sampson Company’s balance sheet for December 31, 2002, as well as the income statement, for the year ended December 31, 2002, are on the following page.
Required a. Prepare the statement of cash flows for the year ended December 31, 2002, using the indirect method for net cash flow from operating activities.
b. Prepare the statement of cash flows for the year ended December 31, 2002, using the direct method for net cash flow from operating activities.
c. Comment on significant items disclosed in the statement of cash flows.
| SAMPSON COMPANY | 2002 | 2001 |
| Assets | ||
| Cash | $ 38,000 | $ 60,000 |
| Net receivables | 72,000 | 65,000 |
| Inventory | 98,000 | 85,000 |
| Plant assets | 195,000 | 180,000 |
| Accumulated depreciation | (45,000) | (35,000) |
| Total assets | $358,000 | $355,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ 85,000 | $ 80,000 |
| Accrued liabilities (related to cost of sales) | 44,000 | 61,000 |
| Mortgage payable | 11,000 | — |
| Common stock | 180,000 | 174,000 |
| Retained earnings | 38,000 | 40,000 |
| Total liabilities and stockholders’ equity | $358,000 | $355,000 |
| SAMPSON COMPANY | ||
| Net sales | $145,000 | |
| Cost of sales | 108,000 | |
| Gross profit | 37,000 | |
| Other expenses | 6,000 | |
| Profit before taxes | 31,000 | |
| Tax expense | 12,000 | |
| Net income | $ 19,000 | |
Other data:
1. Dividends paid in cash during 2002 were $21,000.
2. Depreciation is included in the cost of sales.
3. The change in the accumulated depreciation account is the depreciation expense for the year.
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