Benchmark – Emerging Issues In Brain Technology
January 5, 2018
Emergency Management Homework
January 5, 2018

Prepare a statement of cash flows using the indirect method for the ABC Co for the year 2012. ABC Co. Balance Sheet 1/1/2012 12/31/2012 Increase/(Decrease)

Prepare a statement of cash flows using the indirect method for the ABC Co for the year 2012.

ABC Co. Balance Sheet 1/1/2012 12/31/2012 Increase/(Decrease)

Cash 700,000 840,000 140,000
Marketable securities 800,000 670,000 (130,000)
AR 100,000 175,200 75,200
Allowance for bad debts (20,000) (34,000) 14,000
Inventory 250,000 334,000 84,000
Prepaid expenses 40,000 21,400 (18,600)
Investment in BVH Inc. 50,000 25,000 (25,000)
PP&E 450,000 750,000 300,000
Accumulated Depreciation (200,000) (420,000) 220,000
Deferred Tax Assets 100,000 10,000 (90,000)
Accounts Payable (750,000) (658,600) (91,400)
Accrued Liabilities (300,000) (218,000) (82,000)
Net Assets 1,220,000 1,495,000

8% bond liability – (100,000) 100,000
Common stock & APIC (900,000) (1,190,000) 290,000
Treasury stock 20,000 (20,000)
Retained Earnings (320,000) (225,000) (95,000)
(1,220,000) (1,495,000)

Analysis of the Retained Earnings:

Retained Earnings, December 31, 2011 320,000
Add: Net Income 295,000

Deduct: Cash Dividends paid 2012 150,000
Stock Dividends 240,000

Retained Earnings-Unappropriated, December 31, 2012 225,000

Additional Information:

  1. On January 31, 2012, marketable securities (available for-sale) costing $130,000 were sold for $160,000.

  2. The company buys back its own stocks worth $20,000 and held them in treasury.

  3. Accounts receivable of $5,000 and $6,000 were considered uncollectible and written-off in 2011 and 2012, respectively.

  4. Major repairs of $44,000 to the equipment were debited to accumulated depreciation during the year. No assets were retired or sold during 2012.

  5. The company owns 25% of BVH Inc.and accounts for its investment using the equity method. BVH paid no dividends during the year and had a net loss of $100,000.

  6. During the year, employees exercised 1,000 stock options each having an exercise price of $50 a share. The DTA decrease reflects tax benefits the Company realized upon the exercise of the options.

  7. At January 1, 2012, the cash balance was $700,000.

  8. Interest and tax expense were $20,000 and $80,000, respectively.

  9. Cash received on bond issue was $100,000 on December 15, 2012. There were no bond issue cost, interest cost or repayment during 2012.

  10. Going back to ABC Co, assume that net A/R changed from $80,000 to $141,200; inventory from $250,000 to $334,000; A/P from $750,000 to $658,600; sales and cost of sales were $2,000,000 and $1,100,000, respectively.

Had the cash flow statement been prepared using the direct method, what would be the amounts for:

a) Cash Received from Customers
b) Cash Paid to Suppliers

 

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