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The following information and financial statements excerpts pertain to Le Chateau Meaux Inc.

The following information and financial statements excerpts pertain to Le Chateau Meaux Inc.
a. All short term investments (securities available for sale as per SFAS 115, 1993)) were purchased on 12/31/04 and sold during 2005.
b. The company entered a lease agreement on 12/31/05.
c. Fixed assets with a net book value of $15 were sold during the year.
d. The company repaid the current portion of long-term debt during the year.
e. Dividend was declared and partially paid.
Required:  Prepare a Statement of Cash Flows in full compliance with SFAS 95 (1987)
1. Prepare the statement of cash flow for the year 2005 using the direct method. (Operating section, investing and financing sections)
2. Reconcile net income and operating cash flow for the year 2005. (You only need to do the operating section)
See attached file for full problem description.

The following information and financial statements excerpts pertain to
Le Chateau Meaux Inc.
a. All short term investments (securities available for sale as per SFAS
115, 1993)) were purchased on 12/31/04 and sold during 2005.
b. The company entered a lease agreement on 12/31/05.
c. Fixed assets with a net book value of $15 were sold during the year.
d. The company repaid the current portion of long-term debt during the
year.
e. Dividend was declared and partially paid.
Required: Prepare a Statement of Cash Flows in full compliance with
SFAS 95 (1987)
1. Prepare the statement of cash flow for the year 2005 using the direct
method. (Operating section, investing and financing sections)
2. Reconcile net income and operating cash flow for the year 2005. (You
only need to do the operating section)
Le Chateau Meaux
Income Statement
For the Year Ended 12/31/2005
Revenues, net
426
COGS
310
Gross margin
116
General expenses 30
Wages expenses 42
Depreciation expenses 24
Interest expenses 11
Loss on sale of fixed assets 3 110
Operating Income
6
Gain on sale of “available for sale” securities 12
Income before Taxes 18
Tax expenses 8
Net income
10
Le Chateau Meaux
Comparative Balance Sheets
12/31/2004 12/31/2005
Assets
Cash 54 45
Short term investments 95 0
Accounts receivable 45 85
Inventory 52 75
Prepaid general expenses 11 15
Total Current Assets 257 220
Fixed assets under capital lease, net 0 50
Fixed assets, net 165 228
Total Assets 422 498
Liabilities
Accounts payable 38 48
Wages payable 12 6
Tax payable 3 5
Dividend payable 0 4
Current portion of long term debt 10 12
Total Current Liabilities 63 75
Obligations under capital leases 0 50
Long term debt 183 180
Total Liabilities 246 305
Stockholders Equity
Common stock 150 163
Retained earnings 26 30
Total Stockholders Equity 176 193
Total Stockholders and Liabilities 422 498

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