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Example1 Indiret Method SCF

This is indirect method you on right place

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45 views1 page

Example1 Indiret Method SCF

This is indirect method you on right place

Uploaded by

sourpiromleap
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Example 1: Prepare statement of cash flow (indirect method) for 31

December 2011.

Computer Service Company


Comparation balance sheets
December 31
Assets: 2011 2010
Current assets
Cash $ 55,000 $ 33,000
Account Receivable 20,000 30,000
Inventory 15,000 10,000
Prepaid expense 5,000 1,000
Property, plant and equipment:
Land 130,000 20,000
Building 160,000 40,000
Accumulated depreciation of building (11,000) (5,000)
Equipment 27,000 10,000
Accumulated depreciation of equipment (3,000) (1,000)
Total assets $ 398,000 $ 138,000
Liabilities & Stockholder equity:
Current liabilities:
Account payable $ 28,000 $ 12,000
Income taxes payable 6,000 8,000
Long-term liabilities:
Bond payable 130,000 20,000
Stockholder equity:
Common stock 70,000 50,000
Retained earnings 164,000 48,000
Total liabilities & Stockholder equity 398,000 138,000
Computer Service Company
Income statement
For year ended December 31,2010
Service Revenue $ 507,000
Cost of goods sold $ 150,000
Operating expense 111,000
Depreciation expense 9,000
Loss on sale of equipment 3,000
Interest expense 42,000 $ 315,000
Income before income tax 192,000
Income tax expense 47,000
Net income 145,000

Addition information for 2010:


1. The company declared and paid a $29,000 cash dividend
2. A building costing $120,000 was purchased for cash. Equipment costing $25,000
was also purchase for cash.
3. The company sold equipment with book value of $7,000 (cost $8,000 less
accumulate depreciation $1,000) for cash $ 4,000 cash.
4. Issued common stock for $20,000 cash.
5. Depreciation expense was comprised of $6,000 for building and $3,000 for
equipment.

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