Dublin Enterprises, Inc. (DEI), owns a chain of retail electronics stores located in shoppingmalls. The following are the company’s 2018 income statement and comparative balancesheets ($ in millions):Concept Review ExerciseSTATEMENT OF CASHFLOWSIncome StatementFor the Year Ended December 31, 2018Revenue $2,100Cost of goods sold 1,400Gross profit 700Operating expenses:Selling and administrative $ 355Depreciation 85Total operating expenses 440Income before income taxes 260Income tax expense 78Net income $ 182Comparative Balance Sheets 12/31/2018 12/31/2017Assets:Cash $ 300 $ 220Accounts receivable (net) 227 240Inventory 160 120Property, plant, and equipment 960 800Less: Accumulated depreciation (405) (320)Total assets $1,242 $1,060Liabilities and shareholders’ equity:Accounts payable $ 145 $ 130Payables for selling and admin. expenses 147 170Income taxes payable 95 50Long-term debt –0– 100Common stock 463 400Retained earnings 392 210Total liabilities and shareholders’ equity $1,242 $1,060Required:1. Prepare DEI’s 2018 statement of cash flows using the direct method.2. Prepare the cash flows from operating activities section of DEI’s 2018 statement of cashflows using the indirect method.
Dublin Enterprises, Inc. (DEI), owns a chain of retail electronics stores located in shopping
malls. The following are the company’s 2018 income statement and comparative
sheets
Concept Review Exercise
STATEMENT OF
FLOWS
Income Statement
For the Year Ended December 31, 2018
Revenue $2,100
Cost of goods sold 1,400
Gross profit 700
Operating expenses:
Selling and administrative $ 355
Total operating expenses 440
Income before income taxes 260
Income tax expense 78
Net income $ 182
Comparative Balance Sheets 12/31/2018 12/31/2017
Assets:
Cash $ 300 $ 220
Inventory 160 120
Property, plant, and equipment 960 800
Less:
Total assets $1,242 $1,060
Liabilities and shareholders’ equity:
Accounts payable $ 145 $ 130
Payables for selling and admin. expenses 147 170
Income taxes payable 95 50
Long-term debt –0– 100
Common stock 463 400
Total liabilities and shareholders’ equity $1,242 $1,060
Required:
1. Prepare DEI’s 2018 statement of cash flows using the direct method.
2. Prepare the cash flows from operating activities section of DEI’s 2018 statement of cash
flows using the indirect method.
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