PR 16-5B Statement of cash flows—direct method applied to PR 16-1B
The comparative balance sheet of Juras Equipment Co. for Dec. 31, 2013 and 2012, is:
| Dec. 31, 2013 | Dec. 31, 2012 | |
| Assets | ||
| Cash | $ 99,840 | $ 67,680 |
| Accounts receivable (net) | 292,560 | 265,680 |
| Inventories | 421,440 | 409,200 |
| Investments | 0 | 144,000 |
| Land | 417,600 | 0 |
| Equipment | 619,200 | 505,440 |
| Accumulated depreciation | (139,920) | (119,040) |
| $1,710,720 | $1,272,960 | |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable (merchandise creditors) | $ 290,400 | $ 274,080 |
| Accrued expenses payable (operating expenses) | 43,200 | 37,920 |
| Dividends payable | 36,000 | 28,800 |
| Common stock, $1 par | 162,000 | 144,000 |
| Paid-in capital in excess of par—common stock | 594,000 | 288,000 |
| Retained earnings | 585,120 | 500,160 |
| $1,710,720 | $1,272,960 |
The income statement for the year ended December 31, 2013, is as follows:
| Sales | $3,246,048 | |
| Cost of merchandise sold | 1,997,568 | |
| Gross profit | $1,248,480 | |
| Operating expenses: | ||
| Depreciation expense | $ 20,880 | |
| Other operating expenses | 831,600 | |
| Total operating expenses | 852,480 | |
| Operating income | $ 396,000 | |
| Other expenses: | ||
| Loss on sale of investments | (14,400) | |
| Income before income tax | $ 381,600 | |
| Income tax expense | 152,640 | |
| Net income | $ 228,960 |
The following additional information was taken from the records:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $129,600 cash.
d. The common stock was issued for cash.
e. There was a $144,000 debit to Retained Earnings for cash dividends declared.
Instructions
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.
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