ACCOUNTING
The comparative balance sheets for Redwood Corporation for 2011 and 2012 follow:
Balance Sheets
As of December 31
2011
Assets
Cash 40,600
Accounts Receivable 22,000
Merchandise Inventory 176,000
Prepaid Rent 4,800
Equipment 288,000
Accumulated Depreciation (236,000)
Land 80,000
Total Assets $375,400
2012
Assets
Cash 68,800
Accounts Receivable 30,000
Merchandise Inventory 160,000
Prepaid Rent 2,400
Equipment 256,000
Accumulated Depreciation (146,800)
Land 192,000
Total Assets $562,400
Liabilities
2011
Accts Payable (Inventory) 76,000
Salaries Payable 24,000
2012
Accts Payable (Inventory) 67,000
Salaries Payable 28,000
2011
Stockholders Equity
Common Stock, $25 par value 200,000
Retained Earnings 75,400
Total Liabilities and Stockholders Equity 375,400
2012
Stockholders Equity
Common Stock, $25 par value 250,000
Retained Earnings 217,400
Total Liabilities and Stockholders Equity 562,400
Income Statement
For the Year Ended December 31, 2012
Sales Revenue 1,500,000
Cost of Goods Sold (797,200)
Gross Profit 702,800
Operating Expense
Depreciation expense (22,800)
Rent expense (24,000)
Salaries expense (256,000)
Other operating expense (258,000)
Net Income $142,000
Other information
1. Purchased land for $112,000
2. Purchased new equipment for $100,000
3. Sold old equipment that cost $132,000 with accumulated depreciation of $112,000 for $20,000 cash.
4. Issued Common Stock for $50,000
Required
Prepare the statement of cash flows for 2012 using the indirect method.
Click here for the SOLUTION
