Chapter 6, Problem 6.14P

Statement of Cash Flows, Operating Activities Section, Indirect Method. Repeat the requirements in P6-13 using the indirect method.

P6-13. Statement of Cash Flows, Operating Activities Section, Direct Method. Easthoff, Incorporated provided the following balance sheets and income statement for the current year. Prepare the operating activities section of the cash flow statement using the direct method. Accrued expenses relate to Selling, General, and Administrative Expenses.

Easthoff, Incorporated Balance Sheet At December 31
Assets	Ending	Beginning
Current Assets
Cash	$ 7,000	$ 3,500
Accounts Receivable	8,500	8,000
Merchandise Inventory	2,300	4,000
Prepaid Expenses	1,700	2,200
Total Current Assets	$ 19,500	$ 17,700
Noncurrent Assets
Investments	$ 12,000	$ 24,300
Property, Plant, and Equipment – net	75,000	58,000
Total Noncurrent Assets	$ 12, 000	$ 82,300
Total Assets	$106,500	$100,000
Liabilities
Current Liabilities
Accounts Payable	$ 4,500	$ 1,000
Accrued Expenses	9,800	5,120
Income Taxes Payable	6,000	4,850
Total Current Liabilities	$ 20,300	$ 10,970
Noncurrent Liabilities
Notes Payable	$ 31,000	$ 42,630
Total Noncurrent Liabilities	31,000	42,630
Total Liabilities	$ 51,300	$ 53,600
Stockholders’ Equity
Common Stock, $1 par value	$ 10,000	$ 9,000
Additional Paid-I n Capital	24,700	20,000
Retained Earnings	20,500	17,400
Total Stockholders’ Equity	$ 55,200	$ 46,400
Total Liabilities and Stockholders’ Equity	$106,500	$100,000

Easthoff, Incorporated Income Statement For the year ended December 31
Sales	$80,085
Cost of Goods Sold	48,051
Gross Profit	32,034
Soiling, General, and Administrative Expenses	10,700
Depreciation Expense	2,400
Total Operating Expenses	13,100
Income Before Interest and Taxes	18,934
Interest Expense	(4,000)
Income Before Tax	14,934
Income Tax Expense	(7,334)
Net Income	$ 7,600