Accounting Problems and Excel Solutions 3

Edwards, Inc. has prepared the following comparative balance sheets for 2003 and 2004: 2004 2003 ————— ———— Cash $ 198,000 $102,000 Receivables 106,000 78,000 Inventory 100,000 120,000 Prepaid expenses 12,000 18,000 Plant assets 840,000 700,000 Accumulated depreciation (300,000) (250,000) Patent 102,000 116,000 ——————— ————— $1,058,000 $884,000 Accounts payable $ 102,000 $112,000 Accrued liabilities 40,000 28,000 Mortgage payable ——— 300,000 Preferred stock 350,000 ——— Additional paid-in capital——preferred 80,000 ——— Common stock 400,000 400,000 Retained earnings 86,000 44,000 ——————— ————— $1,058,000 $884,000 1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period. 2. The Retained Earnings account has been charged for dividends of $92,000 and credited for the net income for the year. The income statement for 2004 is as follows: Sales $1,320,000 Cost of sales 726,000 —————— Gross profit 594,000 Operating expenses 460,000 —————— Net income $ 134,000 INSTRUCTIONS (a) From the information above, prepare a statement of cash flows (indirect method) for Edwards, Inc. for the year ended December 31, 2004. (b) From the information above, prepare a schedule of cash provided by operating activities using the direct method.