Chapter 22, Problem 22.14P

Statement of Cash Flows, Direct Method, Complex Accounts, Disclosures. Using the information provided in P22-13, prepare the cash flow statement and all required disclosures for American Safety Products using the direct method.

American Safety Products, Inc.

Balance Sheets

At December 31

Assets		Current Year		Prior Year
Current Assets
Cash		$ 1,379,568		$ 378,122
Trading Debt Investments		424,778		600,548
Accounts Receivable - net		695,756		302,806
Merchandise Inventory		988,706		695,756
Prepaid Expenses		647,500		385,000
Total Current Assets		$ 4,136,308		$ 2,362,232
Noncurrent Assets
Investments in Affiliate Companies		$ 1,940,794		$ 736,037
Held-to-Maturity Debt Investments		542,500		351,750
Property, Plant, and Equipment – net		9,993,257		11,208,999
Equipment under Finance Lease - net		2,800,000		2,975.000
Intangible Assets - net		640,828		915.469
Deferred Tax Asset - net		195,300		143.500
Total Noncurrent Assets		$ 16,112,679		$16,330,755
Total Assets		$20,248,987		$18,692,987
Liabilities Current Liabilities
Current Portion of Long-Term Debt	$ 183,096		$ 481,903
Accounts Payable	1,369,541		1,058,102
Dividends Payable	549,281		402,806
Income Taxes Payable	481,903		428,439
Total Current Liabilities	$ 2,583,821		$ 2,371,250
Noncurrent Liabilities
Bonds Payable	$ 2,929,500		$ 2,929,500
Add: Premium on Bonds	941,102		1,061,944
Notes Payable	1,651,506		1,647,844
Obligations under Finance Leases	3,500,875		3,850,000
Deferred Tax Liability	457,734		530,972
Net Obligations under Pension Plans	585,900		439,425
Total Noncurrent Liabilities	$10,066,617		$10,459,685
Total Liabilities	$12,650,438		$12,830,935
Shareholders' Equity
Common Stock, $1 par value	$ 1,338,706		$ 988.706
Additional Paid-in Capital in	3,274,298		2,574.298
Excess of Par - Common Additional Paid-in Capital - Stock Options	120,842		0
Retained Earnings	6,416,769		4,185,448
Accumulated Other Comprehensive Income (AOCI)	(954,285)		582,238
Total Shareholders' Equity	$10,196,330		$ 8,330,690
Less: Treasury Stock at Cost	(2,597,781)		(2,468,638)
Total Liabilities and Shareholders' Equity	$20,248,987		$18,692,987

American Safety Products, Inc.

Income Statement

For the Current Year Ended December 31

Sales	$9,458,700
Cost of Goods Sold	5,460,300
Gross Profit	$3,998,400
Selling, General, and Administrative Expenses	$360,763
Pension Expense	1,085.814
Bad Debt Expense	15,380
Depreciation Expense	138,338
Amortization Expense - finance leases	175,000
Amortization Expense - intangible assets	48,825
Total Operating Expenses	$ 1.824.120
Operating Income	$2.174,280
Loss on Disposal of Equipment	$ (189,875)
Interest Expense	(407.472)
Interest Revenue	789.250
Realized Loss on Trading Securities	(65.500)
Equity Earnings from Affiliate Companies	1,792,149
Income before Tax	$ 4,092,832
Income Tax Expense	(1,493,853)
Net Income	$2,598,979

Additional Information:

• American Safety Products sold trading securities at a loss.
• The company sold one of its franchises at cost.
• The company sold plant assets with a carrying value of $1.077.404 for a loss of $189,875.
• The company made debt payments to reduce the current portion of long-term debt and finance lease obligations American Safety Products borrowed an additional $3,662 by issuing a long-term note.
• The change in AOCI is the result of adjustments required for the company’s defined-benefit pension plan.
• American Safety Products acquired additional securities classified as held to maturity It did not purchase any other investments during the year.
• It did not reissue any treasury stock.
• Treat the trading securities as an investing activity.
• Ignore the amortization of the held-to-maturity investment.
• Assume no adjustments to fair value for trading investments.