Problem 23-6_MARCUS INC_statement of cash flows
| Problem 23-6 |
Comparative balance sheet accounts of Marcus Inc. are presented below.
| MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2012 AND 2011 |
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| December 31 | ||||
| Debit Accounts | 2012 | 2011 | ||
| Cash | $41,940 | $33,490 | ||
| Accounts Receivable | 70,330 | 60,340 | ||
| Inventory | 29,850 | 24,210 | ||
| Investments (available-for-sale) | 22,460 | 38,200 | ||
| Machinery | 30,150 | 19,150 | ||
| Buildings | 67,150 | 56,070 | ||
| Land | 7,440 | 7,440 | ||
| $269,320 | $238,900 | |||
| Credit Accounts | ||||
| Allowance for Doubtful Accounts | $2,850 | $1,130 | ||
| Accumulated Depreciation—Machinery | 6,280 | 2,160 | ||
| Accumulated Depreciation—Buildings | 14,010 | 8,730 | ||
| Accounts Payable | 35,650 | 24,290 | ||
| Accrued Payables | 3,240 | 2,817 | ||
| Long-Term Notes Payable | 20,770 | 31,040 | ||
| Common Stock, no-par | 150,700 | 124,300 | ||
| Retained Earnings | 35,820 | 44,433 | ||
| $269,320 | $238,900 |
Additional data (ignoring taxes):
| 1. | Net income for the year was $39,067. | |
| 2. | Cash dividends declared and paid during the year were $21,280. | |
| 3. | A 20% stock dividend was declared during the year. $26,400 of retained earnings was capitalized. | |
| 4. | Investments that cost $25,000 were sold during the year for $28,340. | |
| 5. | Machinery that cost $3,210, on which $727 of depreciation had accumulated, was sold for $1,662. |
Marcus’s 2012 income statement follows (ignoring taxes).
| Sales | $537,688 | ||||
| Less: cost of goods sold | 380,630 | ||||
| Gross margin | 157,058 | ||||
| Less: Operating expenses (includes $10,127 depreciation and $5,970 bad debts) | 120,510 | ||||
| Income from operations | 36,548 | ||||
| Other: Gain on sale of investments | $3,340 | ||||
| Loss on sale of machinery | (821 | ) | 2,519 | ||
| Net income | $39,067 |
(a)Compute net cash flow from operating activities using the direct method.
(b)Prepare a statement of cash flows using the indirect method.