preparing a complete statement of cash flows the following are financial statements 693033

Preparing a Complete Statement of Cash Flows

The following are financial statements for Germaine Company:

Germaine Company

Comparative Balance Sheet

December 31, 2008 and 2007

(Dollars in thousands)

 

2008

2007

Assets

 

 

Cash                                                                 

$22

$16

Accounts receivable                                                     

225

245

Inventory                                                              

105

125

Prepaid general expenses                                                 

21

12

Plant assets                                                            

1,025

1,000

Accumulated depreciation—plant assets                                      

(530)

(585)

Total assets                                                          

 width=$ 868

 width=$ 813

Liabilities and Stockholders’ Equity

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Accounts payable                                                       

$70

$45

Interest payable                                                         

15

12

Income taxes payable                                                    

80

77

Bonds payable                                                          

105

97

Common stock                                                         

362

354

Retained earnings                                                       

236

228

Total liabilities and stockholders’ equity                                     

 width=$ 868

 width=$ 813

 

Germaine Company

Condensed Income Statement

For the Year Ended December 31, 2008

(Dollars in thousands)

 

Sales              

 

$1,450

Cost of goods sold   

 

990

Gross profit        

 

$460

Operating expenses:

 

 

Depreciation expense

$55

 

General expenses  

340

 

Interest expense   

12

 

Income tax expense 

15

422

Net income        

 

$38

The following information is also available for 2008:

(a) Plant assets were sold for their book value of $180 during the year. The assets had an original cost of $290.

(b) Cash dividends totaling $30 were paid during the year.

(c) All accounts payable relate to inventory purchases.

(d) All purchases of plant assets were cash transactions.

Prepare a statement of cash flows for 2008 using the indirect method.