Chapter 13 Statement of Cash Flows 613Dec. 31, 2007 Dec. 31, 2006
Assets
Cash $ 464,100 $ 395,800
Accounts receivable (net) 163,200 145,700
Inventories 395,000 367,900
Investments 0 120,000
Land 160,000 0
Equipment 695,500 575,500
Accumulated depreciation—equipment (194,000) (168,000)
Total $1,683,800 $1,436,900
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) $ 228,700 $ 210,500
Accrued expenses (operating expenses) 16,500 21,400
Dividends payable 14,000 10,000
Common stock, $10 par 75,000 60,000
Paid-in capital in excess of par—common stock 265,000 175,000
Retained earnings 1,084,600 960,000
Total $1,683,800 $1,436,900The comparative balance sheet of Medalist Athletic Apparel Co. at December 31, 2007 and 2006,
is as follows:Dec. 31, 2007 Dec. 31, 2006
Assets
Cash $ 37,200 $ 45,300
Accounts receivable (net) 61,200 65,400
Merchandise inventory 91,000 85,600
Prepaid expenses 5,500 4,000
Equipment 190,500 155,500
Accumulated depreciation—equipment (41,200) (35,800)
Total $344,200 $320,000Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) $ 67,100 $ 65,400
Mortgage note payable 0 95,000
Common stock, $1 par 14,000 10,000
Paid-in capital in excess of par—common stock 200,000 100,000
Retained earnings 63,100 49,600
Total $344,200 $320,000Additional data obtained from the income statement and from an examination of the accounts
in the ledger for 2007 are as follows:
a. Net income, $61,500.
b. Depreciation reported on the income statement, $17,900.
c. Equipment was purchased at a cost of $47,500, and fully depreciated equipment costing
$12,500 was discarded, with no salvage realized.
d. The mortgage note payable was not due until 2011, but the terms permitted earlier pay-
ment without penalty.
e. 4,000 shares of common stock were issued at $26 for cash.
f. Cash dividends declared and paid, $48,000.Instructions
Prepare a statement of cash flows, using the indirect method of presenting cash flows from
operating activities.Problem 13-2A
Statement of cash flows—
indirect method
Goal 2
Net cash flow from
operating activities, $78,400