Use the following financial statements and additional information to prepare the operating, investing, and financing sections of the statement of cash flows for the year ended December 31, 2012 using the indirect method. Derby Company Balance Sheets December 31 2012 2011 Change Assets: Cash $ 85,600 $ 65,200 20,400 Accounts receivable, net 72,850 56,750 16,100 Merchandise inventory 157,750 144,850 12,900 Prepaid expenses 6,080 12,680 (6,600) Equipment 280,600 245,600 35,000 Accumulated depreciation-Equipment (80,600) (97,600) 17,000 Total assets $522,280 $427,480 94,800 Liabilities: Accounts payable $ 52,850 $ 45,450 7,400 Income taxes payable 15,240 12,240 3,000 Notes payable (long term) 59,200 79,200 (20,000) Total liabilities $127,290 $136,890 Equity: Common stock 200,000 150,000 50,000 Paid-in capital in excess of par 53,000 40,000 13,000 Retained earnings 141,990 100,590 41,400 Total equity $394,990 $290,590 ______ Total liabilities and equity $522,280 $427,480 94,800 Derby Company Income Statement For Year Ended December 31, 2012 Sales $488,000 Cost of goods sold $212,540 Depreciation expense 43,000 Other operating expenses 106,260 Interest expense 6,400 (368,200) Other gains (losses): Gain on sale of equipment 4,700 Income before taxes 124,500 Income taxes expense 41,100 Net income $ 83,400 Additional Information a. A $20,000 note payable is retired at carrying value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit. g. Common stock sold for cash at a price above par.

Use the following financial statements and additional information to prepare the operating, investing, and financing sections of the statement of cash flows for the year ended December 31, 2012 using the indirect method. Derby Company Balance Sheets December 31 2012 2011 Change Assets: Cash $ 85,600 $ 65,200 20,400 Accounts receivable, net 72,850 56,750 16,100 Merchandise inventory 157,750 144,850 12,900 Prepaid expenses 6,080 12,680 (6,600) Equipment 280,600 245,600 35,000 Accumulated depreciation-Equipment (80,600) (97,600) 17,000 Total assets $522,280 $427,480 94,800 Liabilities: Accounts payable $ 52,850 $ 45,450 7,400 Income taxes payable 15,240 12,240 3,000 Notes payable (long term) 59,200 79,200 (20,000) Total liabilities $127,290 $136,890 Equity: Common stock 200,000 150,000 50,000 Paid-in capital in excess of par 53,000 40,000 13,000 Retained earnings 141,990 100,590 41,400 Total equity $394,990 $290,590 ______ Total liabilities and equity $522,280 $427,480 94,800 Derby Company Income Statement For Year Ended December 31, 2012 Sales $488,000 Cost of goods sold $212,540 Depreciation expense 43,000 Other operating expenses 106,260 Interest expense 6,400 (368,200) Other gains (losses): Gain on sale of equipment 4,700 Income before taxes 124,500 Income taxes expense 41,100 Net income $ 83,400 Additional Information a. A $20,000 note payable is retired at carrying value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit. g. Common stock sold for cash at a price above par.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Derby Company

Balance Sheets

December 31

	2012	2011	Change
Assets:
Cash	$ 85,600	$ 65,200	20,400
Accounts receivable, net	72,850	56,750	16,100
Merchandise inventory	157,750	144,850	12,900
Prepaid expenses	6,080	12,680	(6,600)
Equipment	280,600	245,600	35,000
Accumulated depreciation-Equipment	(80,600)	(97,600)	17,000
Total assets	$522,280	$427,480	94,800

Liabilities:
Accounts payable	$ 52,850	$ 45,450	7,400
Income taxes payable	15,240	12,240	3,000
Notes payable (long term)	59,200	79,200	(20,000)
Total liabilities	$127,290	$136,890

Equity:
Common stock	200,000	150,000	50,000
Paid-in capital in excess of par	53,000	40,000	13,000
Retained earnings	141,990	100,590	41,400
Total equity	$394,990	$290,590	______
Total liabilities and equity	$522,280	$427,480	94,800

Derby Company

Income Statement

For Year Ended December 31, 2012

Sales		$488,000
Cost of goods sold	$212,540
Depreciation expense	43,000
Other operating expenses	106,260
Interest expense	6,400	(368,200)
Other gains (losses):
Gain on sale of equipment		4,700
Income before taxes		124,500
Income taxes expense		41,100
Net income		$ 83,400

Additional Information

a. A $20,000 note payable is retired at carrying value in exchange for cash.

b. The only changes affecting retained earnings are net income and cash dividends paid.

c. New equipment is acquired for $120,000 cash.

d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.

e. Prepaid expenses relate to Other Expenses on the income statement.

f. All purchases and sales of merchandise inventory are on credit.

g. Common stock sold for cash at a price above par.

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