The following information was extracted from the financial records of Bower Manufacturing Industries. Income Statement 1997 Sales
Question:
The following information was extracted from the financial records of Bower Manufacturing Industries. Income Statement 1997 Sales $190,000 Cost of goods sold (80,000) Depreciation expense (30,000) Interest expense (10,000) Salary expense (12,000) Supplies expense (7,000) Loss on sale of marketable sec. (4,000) Loss on sale of fixed assets (10,000) Net income $ 37,000 Balance Sheets 1997 1996 Cash $ 747,000 $ 593,000 Marketable securities 85,000 140,000 Accounts receivable 450,000 400,000 Supplies inventory 10,000 12,000 Inventory 150,000 175,000 Short-term notes receivable 100,000 50,000 Machinery and equipment 550,000 500,000 Less: Accumulated depreciation (90,000) (75,000) Total assets $2,002,000 $1,795,000 Accounts payable $ 60,000 $ 95,000 Salaries payable 10,000 10,000 Bonds payable 500,000 500,000 Discount on bonds payable (5,000) (10,000) Common stock ($10 par value) 200,000 100,000 Additional paid-in capital 900,000 800,000 Retained earnings 337,000 300,000 Total liabilities and stockholders’ equity $2,002,000 $1,795,000 ADDITIONAL INFORMATION: 1. The company purchased machinery in exchange for 10,000 shares of common stock. The stock was selling for $20 per share at that time. 2. The short-term receivable was received from a customer in exchange for the sale of mer¬ chandise inventory. 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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