Problem 12-3_Problem 12-4_Statement of Cash Flows

Problem 12-3 Statement of Cash Flows (Direct Method)

Peoria Corp. just completed another successful year, as indicated by the following   income statement:

                  For the Year Ended

                  December 31, 2012

Sales revenue                                     $1,250,000

Cost of goods sold                                  700,000

Gross profit                                         $ 550,000

Operating expenses                                 150,000

Income before interest and taxes           $ 400,000

Interest expense                                       25,000

Income before taxes                             $ 375,000

Income tax expense                                150,000

Net income                                          $ 225,000

Presented here are comparative balance sheets:

December 31                                      2012                      2011

Cash                                                  $ 52,000                $ 90,000

Accounts receivable                              180,000                130,000

Inventory                                             230,000               200,000

Prepayments                                         15,000                25,000

Total current assets                            $ 477,000              $ 445,000

Land                                                  $ 750,000               $ 600,000

Plant and equipment                              700,000               500,000

Accumulated depreciation                     (250,000)               (200,000)

Total long-term assets                         $1,200,000             $ 900,000

Total assets                                        $1,677,000             $1,345,000

Accounts payable                                 $ 130,000             $ 148,000

Other accrued liabilities                               68,000               63,000

Income taxes payable                                 90,000             110,000

Total current liabilities                            $ 288,000           $ 321,000

Long-term bank loan payable                  $ 350,000           $ 300,000

Common stock                                       $ 550,000           $ 400,000

Retained earnings                                     489,000              324,000

Total stockholders equity                      $1,039,000           $ 724,000

Total liabilities and stockholders equity    $1,677,000                   $1,345,000

Other information is as follows:

a. Dividends of $60,000 were declared and paid during the year.

b. Operating expenses include $50,000 of depreciation.

c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

Required:

Prepare statement of cash flows for 2012 using direct method in the operating activities section

Problem 12-4 Statement of Cash Flows Indirect Method

Refer to all of the facts in Problem 12-3.

Required

Prepare a statement of cash flows for 2012 using the indirect method in the Operating Activities section.