The income statement of Frank Corporation follows on the next page.

Analysis of Selected 2004 Account Balances and Transactions:

a. Purchased investment securities for $5,000 cash.

b. Borrowed $15,000 on a two-year, 8 percent interest43earing note.

c. Durino 2004, sold machinery for its net book value; received $1 1.000 in cash.

d. Purchased machinery for $50,000; paid S9.000 in cash and signed a four-year note payable to the dealer for $41,000.

e. At December 31, 2004. declared and paid a cash dividend of S 10.000.

f. Cash balance on December 31. 2003 was $21,000.

Required:
Prepare a statement of cash flows, indirect method, using the schedule approach. Include any additional required note disclosures.

Transcribed Image Text:

FRANK CORPORATION Income Statement For the Year Ended December 31, 2004 Accrual Basis Sales revenue (one-fourth on credit; accounts receivable at year's end 2003, $12,000; 2004, $17,000) Cost of goods sold (one-third on credit; accounts payable at year's end 2003, $10,000; 2004, $7,000; inventory at year's end-2003, $60,000; 2004, $52,000) Expenses Salaries and wages (including accrued wages payable at $400.000 268.000 year's end-2003, $1,000; 2004, $800) $51,000 Depreciation expense 9,200 Rent expense (no accruals) 5,800 Interest expense (no accruals) 12,200 Income tax expense (income taxes payable at year's end- 2003, $3,000; 2004, $5,000) 11,800 Total expenses 90.000 Net income $42.000