Jackson Ski Haus had the following statements prepared as of December 31, 2012.

JACKSON SKI HAUS

COMPARATIVE BALANCE SHEET

AS OF DECEMBER 31 2012 2011

Cash $ 2,500 $ 4,000

Accounts receivable 103,000 97,000

Short-term investments (Available-for-sale) 96,000 121,000

Inventories 91,000 54,000

Prepaid insurance 4,000 6,000

Ski equipment 89,000 43,000

Accumulated depr.equipment (23,500) (18,000)

Trademarks 79,000 83,000

Total assets $441,000 $390,000

Accounts payable $ 92,200 $ 75,000

Income taxes payable 21,800 15,700

Wages payable 4,000 9,000

Short-term loans payable to bank 23,500 0

Long-term loans payable 75,000 125,000

Common stock, $1 par 100,000 100,000

Additional paid-in capital 20,000 20,000

Retained earnings 104,500 45,300

Total liabilities & equity $441,000 $390,000

JACKSON SKI HAUS

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2012

Sales $540,200

Cost of goods sold 302,000

Gross margin 238,200

Operating expenses 94,000

Operating income 144,200

Interest expense $20,500

Loss on sale of equipment 4,000

Income before income tax 119,700

Income tax expense 40,500

Net income $ 79,200

Additional information:

1. Dividends in the amount of $20,000 were declared and paid during 2012.

2. Depreciation expense and amortization expense are included in operating expenses.

3. Equipment that had a cost of $25,000 and was 20% depreciated was sold during 2012.

Instructions

Prepare a statement of cash flows using the direct method. Include a reconciliation schedule for each source of cash flows. Then prepare the operating activities section using the indirect method.