The following information was extracted from the 1997 financial records of Price Restaurant Supply Company. Income Statement
Question:
The following information was extracted from the 1997 financial records of Price Restaurant Supply Company. Income Statement Sales $160,000 Cost of goods sold (100,000) Depreciation expense (12,000) Insurance expense (10,000) Interest expense (11,000) Gain on sale of plant equipment 10,000 Net income $ 37,000 Balance Sheets 1997 1996 Cash $173,000 $120,000 Accounts receivable 60,000 65,000 Inventory 210,000 110,000 Prepaid insurance 14,000 24,000 Plant equipment 275,000 350,000 Less: Accumulated depreciation (67,000) (75,000) Total assets $665,000 $594,000 Accounts payable $ 51,000 $ 50,000 Bonds payable 200,000 200,000 Premium on bonds payable 3,000 5,000 Common stock ($10 par value) 75,000 40,000 Additional paid-in capital 125,000 95,000 Retained earnings 211,000 204,000 Total liabilities and stockholders’ equity $665,000 $594,000 ADDITIONAL INFORMATION: The company sold a piece of plant equipment for cash that had originally cost $100,000. The accumulated depreciation associated with the equipment at the time of sale was $20,000. REQUIRED: Prepare a statement of cash flows for the year ended December 31, 1997, using both the direct and the indirect methods.
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