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Prepare the operating activities section-indirect method. (SO 3) E14-3 The current sections of Blues Traveler Co. balance sheets at December 31, 2005...

Prepare the operating activities
section-indirect method.
(SO 3)
E14-3 The current sections of Blues Traveler Co. balance sheets at December 31, 2005 and
2006, are presented below.
BLUES TRAVELER CO.
Comparative Balance Sheets (partial)
December 31, 2006
2005 2006
Current assets
Cash $105,000 $99,000
Accounts receivable $110,000 $85,000
Inventory $171,000 $186,000
Prepaid expenses $27,000 $32,000
Total current assets $413,000 $402,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable $88,000 $92,000
Total current liabilities $103,000 $97,000
Blues Traveler's net income for 2006 was $163,000. Depreciation expense was $30,000.
Instructions
Prepare the operating activities section of Blues Traveler's statement of cash flows for the year
ended December 31, 2006, using the indirect method.
Compute selected ratios.
(SO 5)
E15-7 Marcus Company has the following comparative balance sheet data.
Balance Sheets
December 31, 2006
2006 2005
Cash $15,000 $30,000
Receivables (net) $70,000 $60,000
Inventories $60,000 $50,000
Plant assets (net) $20,000 $180,000
$345,000 $320,000
Accounts payable $40,000 $60,000
Mortgage payable (15%) $100,000 $100,000
Common stock, $10 par $140,000 $120,000
Retained earnings $65,000 $40,000
$345,000 $320,000
Additional information for 2006:
1. Net income was $25,000.
2. Sales on account were $420,000. Sales returns and allowances were $20,000.
3. Cost of goods sold was $198,000.
4. The allowance for doubtful accounts was $2,500 on December 31, 2006, and $2,000 on December
31, 2005.
Instructions
Compute the following ratios at December 31, 2006.
(a) Current.
(b) Acid-test.
(c) Receivables turnover.
(d) Inventory turnover.

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