Acc291 Principles of Accounting: P13-10A Arma Inc (Statement of Cash Flows - Direct Method )

Acc291 Principles of Accounting

P13-10A
Condensed financial data of Arma Inc. follow.
ARMA INC.
Comparative Balance Sheets
December 31
Assets 2011 2010
Cash 90,800 48,400
Accounts receivable 92,800 33,000
Inventories 112,500 102,850
Prepaid expenses 28,400 26,000
Investments 138,000 114,000
Plant assets 270,000 242,500
Accumulated depreciation (50,000) (52,000)
Total 682,500 514,750

Liabilities and Stockholders' Equity
Accounts payable 112,000 67,300
Accrued expenses payable 16,500 17,000
Bonds payable 110,000 150,000
Common stock 220,000 175,000
Retained earnings 224,000 105,450
Total 682,500 514,750

ARMA INC.
Income Statement
For the Year Ended December 31, 2011
Sales 392,780
Less: Cost of goods sold 135,460
Operating expenses, excluding depreciation 12,410
Depreciation expense 46,500
Income taxes 27,280
Interest expense 4,730
Loss on sale of plant assets 7,500 233,880
Net income 158,900

Additional information:
1. New plant assets costing $85,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.
3. Bonds matured and were paid off at face value for cash.
4. A cash dividend of $40,350 was declared and paid during the year.
Further analysis reveals that accounts payable pertain to merchandise creditors.

Instructions:
Complete the statement of cash flows for Arma Inc. using the direct method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow for financing and investing activities, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List all other amounts as positive.)
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