Prepare a Statement of Cash Flows for MM bookstore Inc. for the year ended December 31, 2011. Show the cash flows from operations using the indirect method. (28 points)

How much cash is received from customers during 2011? (4 pts)

How much cash is paid to suppliers during 2011? (4 pts)

Compute the Inventory turnover ratio in year 2011. In year 2010, MM bookstore Inc. s Inventory turnover ratio was 1.5x . Please brief comment on the companys inventor management (from the perspective of cash flow) (3 points)

MM bookstore Inc. Income Statement For year ended December 31, 2011 Revenues Cost of Goods Sold Gross Profit $1,800,000 1,012,500 787,500 Wages and Salaries Expense Depreciation Expense Rent Expense Total operating expense 540,000 18,000 15,750 573,750 Operating Profit 213,750 Plus: Gain on Sale of Equipment 11,250 Income before tax 225,000 Income Tax Expense 67,500 Net Income 157,500 MM bookstore Inc. Comparative Balance Sheets Dec. 31, 2010 Dec. 31, 2011 Assets Current Assets: Cash and cash equivalents Accounts Receivable, net Inventory Total Current Assets $112,500 $149,250 360,000 373,500 472,500 481,500 $945,000 $1,004,250 Property & Equipment (Net) $517,500 $510,000 Total Assets $1,462,500 $1,514,250 Liabilities and Equity Current Liabilities: Accounts payable - trade Deferred revenue Dividends Payable Total Current Liabilities 191,250 27,000 18,000 $236,250 186,750 33,750 50,250 $270,750 Long-term Bonds Payable 270,000 270,000 Common Stock Retained Earnings 675,000 281,250 675,000 298,500 Total Liabilities and Equity $1,462,500 $1,514,250 Other available information: During the year, MM bookstore Inc. sold equipment costing $45,000 with $36,000 in Accumulated Depreciation. Dividends were declared and paid to common stockholders during the year. No shares were repurchased during the year. No new debt was issued during 2011. There is no Non-cash investing/financing activities