Class+Exercise+from+4-15-09

Class+Exercise+from+4-15-09 - ACCT 2101 CLASS EXERCISE...

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Unformatted text preview: ACCT 2101 CLASS EXERCISE STATEMENT OF CASH FLOWS (3) Name Section Date ARMA INC. Statement of Cash Flows For the Year Ended December 31, 2007 Cash flows from operating activities Net income ........................................................ Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense ................................ Loss on sale of plant assets ....................... Increase in accounts receivable ................. Increase in inventory .................................. Increase in prepaid expenses .................... Increase in accounts payable ..................... Decrease in accrued expenses payable .................................................. Net cash provided by operating activities ................................................. Cash flows from investing activities Sale of plant assets ........................................... Purchase of plant assets ................................... Purchase of investments ................................... Net cash used by investing activities ................................................. Cash flows from financing activities Sale of common stock ....................................... Payment of cash dividends ................................ Redemption of bonds ......................................... Net cash used by financing activities ................................................. Net increase in cash .................................................. Cash at beginning of period ....................................... Cash at end of period ................................................ ACCT 2101 CLASS EXERCISE STATEMENT OF CASH FLOWS (3) REQUIRED: Use the comparative balance sheets and income statement of ARMA Inc. at December 31, 2007, and the additional data given to prepare the Statement of Cash Flows using the indirect method. ARMA INC. Comparative Balance Sheets December 31 Assets 2007 2006 Cash 25 90,800 $ 48,400 Accounts receivable 92,800 33,000 Inventories 112,500 102,850 Prepaid expenses 28,400 26,000 Investments 138,000 114,000 Plant assets 270,000 242,500 Accumulated depreciation (50,000) (52,000) Total $682,500 $514,750 Liabilities and Stockholders’ Equity Accounts payable $112,000 $ 67,300 Accrued expenses payable 16,500 17,000 Bonds payable 110,000 150,000 Common stock 220,000 175,000 Retained earnings 324,999 w Total $682,500 $514,750 ARMA INC. Income Statement Data For the Year Ended December 31, 2007 Sales $392,780 Less: Cost of goods sold $135,460 Operating expenses, excluding depreciation 12,410 Depreciation expense 46,500 Income taxes 27,280 Interest expense 4,730 Loss on sale of plant assets 7,500 233,880 Net income $158,900 Additional information: 1. New plant assets costing $85,000 were purchased for cash during the year 2, Old plant assets having an original cost of $57,500 were sold for $1,500 cash. 3. Bonds matured and were paid off at face value for cash. 4. A cash dividend 013340.350 was declared and paid during the year. ...
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