Acc421 Intermediate Accounting: W5-4 Talbot Corporation (Statement of Cash Flows - Direct Method)

Acc421 Intermediate Accounting

W5-4 Statement of Cash Flows - Direct Method
Data for the Talbot Corporation are presented in W5-3.
December 31
2008 2007
Cash $1,800 $1,050
Accounts receivable 1,750 1,400
Inventory 1,600 1,800
Plant Assets 1,900 1,700
Accumulated depreciation (1,200) (1,150)
Long-term investments (Held-to-maturity) 1,300 1,320
Totals $7,150 $6,120

Accounts payable $1,200 $800
Accrued liabilities 200 270
Bonds payable 1,400 1,550
Common stock 1,900 1,700
Retained earnings 2,450 1,800
Totals $7,150 $6,120

Talbot Corporation
Income Statement
For the Year Ended December 31, 2008
Sales $6,900
Cost of goods sold 4,600
Gross margin 2,300
Selling and administrative expense 930
Income from operations 1,370
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,450
Income tax expense 540
Net income 910
Cash dividends 260
Income retained in business $650

Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant
assets were sold in 2008.

Instructions:
Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule).
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