Question
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2013, appears below: Service revenue $
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2013, appears below: |
Service revenue | $ | 940,000 |
Operating expenses | 720,000 | |
Income before income taxes | 220,000 | |
Income tax expense | 66,000 | |
Net income | $ | 154,000 |
The following balance sheet information also is available: |
12/31/13 | 12/31/12 | |||
Cash | $ | 315,000 | $ | 72,000 |
Accounts receivable | 124,000 | 102,000 | ||
Accounts payable (operating expenses) | 74,000 | 62,000 | ||
Income taxes payable | 12,000 | 19,000 | ||
In addition, the following transactions took place during the year: | |
1. | Common stock was issued for $104,000 in cash. |
2. | Long-term investments were sold for $52,000 in cash. The original cost of the investments also was $52,000. |
3. | $82,000 in cash dividends was paid to shareholders. |
4. | The company has no outstanding debt, other than those payables listed above. |
5. | Operating expenses include $32,000 in depreciation expense. |
Required: | |||||
1. | Prepare a statement of cash flows for 2013 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign) | ||||
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