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E12-12 The 2007 accounting records of Verlander Transport reveal these transactions and events. Payment of

interest $ 10,000 Collection of accounts receivable $182,000 Cash sales 48,000 Payment of salaries and wages 53,000 Receipt of dividend revenue 18,000 Depreciation expense 16,000 Payment of income taxes 12,000 Proceeds from sale of vehicles 812,000 Net income 38,000 Purchase of equipment for cash 22,000 Payment of accounts payable Loss on sale of vehicles 3,000 for merchandise 115,000 Payment of dividends 14,000 Payment for land 74,000 Payment of operating expenses 28,000 Instructions Prepare the cash flows from operating activities section using the direct method. (Not all P12-11A The comparative balance sheets for Ramirez Company as of December 31 are presented below. RAMIREZ COMPANY Comparative Balance Sheets December 31 Assets 2007 2006 Cash $ 71,000 $ 45,000 Accounts receivable 44,000 62,000 Inventory 151,450 142,000 Prepaid expenses 15,280 21,000 Land 105,000 130,000 Equipment 228,000 155,000 Accumulated depreciation-equipment (45,000) (35,000) Building 200,000 200,000 Accumulated depreciation-building (60,000) (40,000) Total $709,730 $680,000 Liabilities and Stockholders' Equity Accounts payable $ 47,730 $ 40,000 Bonds payable 260,000 300,000 Common stock, $1 par 200,000 160,000 Retained earnings 202,000 180,000 Total $709,730 $680,000 Additional information: 1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720. 2. Land was sold for cash at book value. 3. Cash dividends of $15,000 were paid. 4. Net income for 2007 was $37,000. 5. Equipment was purchased for $95,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $6,000 cash. 6. Bonds were converted at face value by issuing 40,000 shares of $1 par value common stock. Instructions Prepare a statement of cash flows for the year ended December 31, 2007, using the indirect method. Cash from operations $105,000

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