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Introduction: Forty-Love Tennis Company is a retail store corporation, which began operations in March, YO. Forty-Love has continued to grow and serve customers and
Introduction: Forty-Love Tennis Company is a retail store corporation, which began operations in March, YO. Forty-Love has continued to grow and serve customers and has just completed its third year of operations. The company's only shareholder, Philip Yur-Karte, has hired you to prepare the Statement of Cash Flows for the year ended December 31, 2012. Forty-Love's current-year income statement, comparative balance sheets, and additional information follow. For the year: 1. All sales are credit sales; 2. All credits to Accounts Receivable represent cash received from customers; 3. All purchases of Merchandise Inventory are made on credit; 4. All debits to Accounts Payable reflect cash payments for Merchandise Inventory; 5. Other Expenses are paid in advance, and initially debited to Prepaid Expenses. Directions: I. II. III. Prepare a complete Statement of Cash Flows using the indirect method for the year-ending December 31, 2012. Disclose any non-cash investing and financing activities in a note Prepare the operating section of the Statement of Cash Flows using the direct method for the year-ending December 31, 2012. Forty-Love Tennis Company Statement of Operations For the Year Ended December 31, 20Y2 Sales Cost of Goods Sold Gross Profit $1,185,000 595,000 590,000 Operating Expenses Depreciation expense $38,600 Other expenses 362,850 401.450 Operating Income 188,550 Other gains (losses) Loss on sale of equipment (2,100) Income before taxes Income tax expense Net income 186,450 28,350 $158,100
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