Question
Prepare statement of cash flows-indirect method. The income statement and additional data of Rayborn Services, Inc., follow: Revenues: Sales Revenue 262,000 Dividend Revenue 11,000 Total
Prepare statement of cash flows-indirect method.
The income statement and additional data of Rayborn Services, Inc., follow:
Revenues:
Sales Revenue 262,000
Dividend Revenue 11,000
Total Revenue 273,000
Expenses:
Cost of Goods Sold 107,000
Salary Expense 60,000
Depreciation Expense 18,000
Advertising Expense 14,000
Interest Expense 9,000
Income Tax Expense 8,000
Total Expenses 216,000
Net Income 57,000
Additional data follows:
A. Acquisition of plant assets totaled $116,000. Of this amount, $101,000 was paid in cash and a $15,000 note payable was isgned for the remainder.
B. Proceeds from the sale of land totaled $22,000. No gain was recognized on the sale.
C. Proceeds from issuance of common stock total $34,000.
D. Payment of long-term note payable was $15,000.
E. Payment of dividends was $14,000.
F. Data from the comparative balance sheet follow:
June 30 2010 2009
Current Assets:
Cash $30,000 $21,000
Accounts Receivable $42,000 $57,000
Inventory $89,000 $83,000
Current Liabilities:
Accounts Payable $38,000 $31,000
Accrued Liabilities $12,000 $20,000
Requirements:
- Prepare Rayborn Services' statement of cash flow for the year ended April 30, 2010, using the indirect method.
- Evaluate Rayborn Services' cash flow for the year. In your evaluation, mention all three categories of cash flows and give the reason for your evaluation.
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