P16-39A

(pp. 784-786) P16-36A The 2008 com parative balance sheet and income statement of Digital Subscriptions, Inc., follow Digital Subseriptions had no noncash investing and financing trans- actions during 2008. During the year, there were no sales of land or equipment, no issuances of notes payable, no retirements of stock, an no treasury stock transactions. Requirements 1. Prepare the 2008 statement of cash flows, formatting operating activi- ties by the indirect method. (pp. 791-792) 2. How will what you learned in this problem help you evaluate an investment? (pp. 784-786) DIGITAL SUBSCRIPTIONS, INC. Comparative Balance Sheet r 31, Increase 2007 (Decrease) 2008 Current assets: S 26,700 18,700 $ 8,000 46,50043,1003,400 84,300 89,900 (5,600) Cash and cash equivalents Accounts receivable Inventories Plant assets: 35,10010,00025,100 Land 100,90093,7007,200 $293,500 $255,400 $38,100 Equipment, net Total assets Current liabilities 31,100 29,800S 1,300 18,100 18,700 (600) Accounts payable Accrued liabilities Long-term liabilities: Notes payable Stockholders' equity: 55,00065,000(10,000) 131,100122,300 8,800 58,200 19,60038,600 $293,500 $255,400 $38,100 Common stock Retained earnings Total liabilities and stockholders' equity continued. 81 The Statement of Cash Flows DIGITAL SUBSCRIPTIONS, INC. Income Statement Year Ended December 31, 2008 Revenues: Sales revenue 438,000 Interest revenue 11,700 Preparing the statement of cash flows-direct method Total revenues 449,700 Expenses: Cost of goods sold Salary expense $205,200 76,400 15,300 Depreciation expense Other operating expense 49,700 24,600 Interest expense 16,900 Income tax expens Preparing the statement of cash flows-direct method 388,100 Total expenses 61,600 Net income