Problem 12-13A Statement of Cash Flows—Direct Method Shepard Company has not yet prepared a…


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Problem 12-13A Statement of Cash Flows—Direct Method Shepard Company has not yet prepared a… 1 answer below » Problem 12-13A Statement of Cash Flows—Direct Method Shepard Company has not yet prepared a formal statement of cash flows for 2014. Comparative balance sheets as of December 31, 2014 and 2013, and a statement of income and retained earn- ings for the year ended December 31, 2014, appear below and on the following page. Shepard Company Balance Sheet December 31 (thousands omitted) View complete question » Assets 2014 2013 Current assets: & Problem 12-13A Statement of Cash Flows—Direct Method Shepard Company has not yet prepared a formal statement of cash flows for 2014. Comparative balance sheets as of December 31, 2014 and 2013, and a statement of income and retained earn- ings for the year ended December 31, 2014, appear below and on the following page. Shepard Company Balance Sheet December 31 (thousands omitted) Assets 2014 2013 Current assets: Cash $      50 $      75 U.S.  Treasury bills (six-month) 25 0 Accounts receivable 125 200 Inventory 525 500 Total  current assets $   725 $   775 Long-term assets: Land $   100 $      80 Buildings  and equipment 510 450 Accumulated depreciation (190 ) (150) Patents (less amortization) 90 110 Total  long-term assets $   510 $   490 Total assets $1,235 $1,265 Liabilities and Owners’  Equity Current Liabilities: Accounts payable                                                      $   370          $   330 Current assets: Taxes payable 10 20 Notes payable 300 400 Total current liabilities $   680 $   750 Term notes payable—due 2018 200 200 Total liabilities $   880 $   950 Owners’ equity: Common stock outstanding $   220 $   200 Retained earnings 135 115 Total owners’ equity $   355 $   315 Total liabilities and owners’ equity $1,235 $1,265 ( Continued ) Shepard Company Statement of Income and Retained Earnings For the Year Ended December 31, 2014 (thousands omitted) Sales $1,416 Less expenses and interest: Cost of goods sold $990 Salaries  and benefits 195 Heat, light, and power 70 Depreciation 40 Property taxes 2 Patent amortization 20 Miscellaneous expense 2 Interest 45 1,364 Net income before income taxes $      52 Income taxes 12 Net income $      40 Retained earnings—January 1, 2014 115 $   155 Stock dividend distributed 20 Retained earnings—December 31, 2014 $   135 Required 1.        For purposes of a statement of cash flows, are the U.S. Treasury bills cash equivalents? If not, how should they be classified? Explain your answers. 2.        Prepare a statement of cash flows for 2014 using the direct method in the Operating Activ- ities section.                                                                                                            (CMA adapted) LO7 View less » Jan 29 2016 12:14 PM

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