Maurice Tutor
$15/per page/Negotiable
Preparing a Complete Statement of Cash Flows
Sunnyvale Corporation prepared the following balance sheet data for 2008 and 2007:
|
 |
Dec 31, 2008 |
Dec 31, 2007 |
|
Cash and cash equivalents                                  |
$ 518,500 |
$ 675,000 |
|
Accounts receivable                                      |
360,000 |
345,000 |
|
Merchandise inventory                                    |
750,000 |
654,000 |
|
Prepaid insurance                                        |
4,500 |
6,000 |
|
Buildings and equipment                                   |
5,515,500 |
4,350,000 |
|
Accumulated depreciation—buildings and equipment               |
(2,235,000) |
(1,995,000) |
|
Total assets                                           |
 $ 4,913,500 |
 $ 4,035,000 |
|
Accounts payable                                        |
$ 613,500 |
$ 945,000 |
|
Salaries payable                                          |
75,000 |
105,000 |
|
Notes payable—bank (current)                              |
150,000 |
600,000 |
|
Notes payable—bank (long-term)                             |
1,500,000 |
— |
|
Common stock                                          |
2,400,000 |
2,400,000 |
|
Retained earnings (deficit)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â |
175,000 |
(15,000) |
|
Total liabilities and stockholders’ equity                      |
 $ 4,913,500 |
 $ 4,035,000 |
Cash needed to purchase new equipment and to improve the company’s working capital position was raised by borrowing from the bank with a long-term note. Equipment costing $75,000 with a book value of $15,000 was sold for $18,000; the gain on the sale was included in net income. The company paid cash dividends of $90,000 and reported earnings of $280,000 for 2008. There were no entries in the retained earnings account other than to record the dividends and net income for the year. Prepare a statement of cash flows for 2008 using the indirect method.