2010-07-11_045532_kunede_4

2010-07-11_045532_kunede_4 - E23-11 (SCFIndirect Method)...

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E23-11 (SCF—Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below. PAT METHENY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2008 AND 2007 2008 2007 Cash $1,800 $1,150 Receivables 1,750 1,300 Inventory 1,600 1,900 Plant assets 1,900 1,700 Accumulated depreciation (1,200) (1,170) Long-term investments (Held-to-maturity) 1,300 1,420 $7,150 $6,300 Accounts payable $1,200 $ 900 Accrued liabilities 200 250 Bonds payable 1,400 1,550 Capital stock 1,900 1,700 Retained earnings 2,450 1,900 $7,150 $6,300 PAT METHENY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2008 Sales $6,900 Cost of goods sold 4,700 Gross margin 2,200 Selling and administrative expense 930 Income from operations 1,270 Other revenues and gains Gain on sale of investments 80 Income before tax 1,350 Income tax expense 540 Net income 810 Cash dividends 260 Income retained in business $ 550 Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2008. Instructions Prepare a statement of cash flows using the indirect method. Pat Metheny Company STATEMENT OF CASH FLOWS For the Year Ended December 31, 2008 (Indirect Method) Cash flows from operating activities Net income $ 810 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense ($1,200 – $1,170) $ 30 Gain on sale of investments (80) Decrease in inventory 300 Increase in accounts payable 300 Increase in receivables (450) Decrease in accrued liabilities (50 ) 50 Net cash provided by operating activities 860 Cash flows from investing activities Sale of held-to-maturity investments [($1,420 – $1,300) + $80] 200 Purchase of plant assets [($1,900 – $1,700) – $70] (130 ) Net cash provided by investing activities 70 Cash flows from financing activities Issuance of capital stock [($1,900 – $1,700) – $70] 130
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Retirement of bonds payable (150) Payment of cash dividends (260 ) Net cash used by financing activities (280 ) Net increase in cash 650 Cash, January 1, 2008 1,150 Cash, December 31, 2008 $1,800 Noncash investing and financing activities Issuance of common stock for plant assets $ 70 E23-12 (SCF—Direct Method) Data for Pat Metheny Company are presented in E23-11. Instructions Prepare a statement of cash flows using the direct method. (Do not prepare a
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This note was uploaded on 03/01/2012 for the course ACC all taught by Professor All during the Spring '12 term at University of Phoenix.

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2010-07-11_045532_kunede_4 - E23-11 (SCFIndirect Method)...

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