P23-2B (SCFIndirect Method) The comparative balance sheets for Queen Corporation show the 8 following information. Cash Accounts receivable Inventory Buildings 0180,000 Equipment 195,000120,000 Investments 042,000 Patents 25,00030,000 December 31 2014 2013 Total assets Allowance for doubtful accounts Accumulated depreciation-buildings Accumulated depreciation-equipment Accounts payable Dividends payable Notes payable, short-term Long-term notes payable Common stock Retained earnings Total liabilities and stockholders equity $413,400 $ 5,000 45,000 76,000 6,000 10,000 50,000 68,000 153,400 $413,400 $526,000 $ 4,500 46,000 20,000 74,000 12,000 6,000 260,000 50,000 61,500 $526,000 $ 55,800 $ 19,000 56,000 51,000 81,60084,000 Additional data related to 2014 are as follows. 1. Equipment that had cost $20,000 and was 60% depreciated at time of disposal was sold for $2,000. 2. $18,000 of the long-term note payable was paid by issuing common stock. 3. Cash dividends paid were $12,000. 4. On January 1, 2014, the building was completely destroyed by a hurricane. Insurance proceeds on the building were $245,000 (net of $22,000 taxes). 5. Investments (available-for-sale) were sold at $2,800 below their cost. The company has made similar sales and investments in the past. 6. Cash was paid for the acquisition of equipment. 7. A long-term note for $20,000 was issued for the acquisition of equipment. 8. Interest of $1,000 and income taxes of $23,600 were paid in cash. Instructions Prepare a statement of cash flows using the indirect method. Hurricane damage is unusual and infrequent in that part of the country. 3 P23-3B (SCFDirect Method) Seahorse Inns Company has not yet prepared a formal statement of cash flows for the 2014 fiscal year. Comparative balance sheets as of December 31, 2013 and 2014, and a state- ment of income and retained earnings for the year ended December 31, 2014, are presented below. SEAHORSE INNS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2014 ($000 OMITTED) Sales Expenses Cost of goods sold $9,200 Salaries and benefits 2,250 Heat, light, and power 150 Depreciation 110 Property taxes 24 Patent amortization 60 Miscellaneous expenses 20 Interest 45 $15,200 11,859 Income before income taxes Income taxes Net income Retained earningsJan. 1, 2014 Stock dividend declared and issued Retained earningsDec. 31, 2014 $ 3,341 1,336 2,005 3,800 5,805 1,000 4,805 2013 $ 210 50 3,100 2,600 5,960 360 2,450 (960) 200 2,050 $8,010 $2,740 460 0 3,200 510 3,710 500 3,800 4,300 $8,010 B Problems 3 Assets Investments (available-for-sale) Accounts receivable, net 2014 SEAHORSE INNS COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 ($000 OMITTED) Current assets Cash $ 129 85 2,800 Inventory 2,860 Total current assets 5,874 Long-term assets Land 540 Buildings and equipment Accumulated depreciation Patents, net Total long-term assets Total assets Liabilities and Stockholders Equity Current liabilities Accounts payable Income taxes payable Notes payable Total current liabilities Long-term notes payabledue 2016 Total liabilities Stockholders equity Common stock Retained earnings Total stockholders equity Total liabilities and stockholders equity 3,200 (1,070) 140 2,810 $8,684 $1,239 240 300 1,779 200 1,979 1,900 4,805 6,705 $8,684 Instructions Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and cost of goods sold. Do not prepare a reconciliation schedule.