I got problem P-13-9-A allfigured out I just can'tP13-9A Condensed financial data of Arma Inc. follow.
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
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
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.
Instructions
Prepare a statement of cash flows using the indirect method.
*P13-10A Data for Arma Inc. are presented in P13-9A. Further analysis reveals that accounts
payable pertain to merchandise creditors.
Instructions
Prepare a statement of cash flows for Arma Inc. using the direct method. figure out problem p-13-10- A
please any help
To prepare the statement of cash flows using the indirect method for Arma Inc., you will need to analyze the changes in the balance sheet accounts and other additional information provided. Here are the steps to follow:
Step 1: Determine the net cash from operating activities
a. Start with Net Income: $158,900 (from the income statement).
b. Adjust for non-cash expenses/income:
- Add back depreciation expense: $46,500.
- Add back loss on sale of plant assets: $7,500.
c. Adjust for changes in working capital:
- Increase in accounts receivable: $92,800 - $33,000 = $59,800.
- Increase in inventories: $112,500 - $102,850 = $9,650.
- Increase in prepaid expenses: $28,400 - $26,000 = $2,400.
- Increase in accounts payable: $112,000 - $67,300 = $44,700.
- Decrease in accrued expenses payable: $16,500 - $17,000 = -$500.
d. Calculate net cash provided by operating activities.
Step 2: Determine the net cash from investing activities
a. Analyze changes in the plant assets and investments accounts:
- Cash used for the purchase of new plant assets: $85,000 (from additional information).
- Cash received from the sale of old plant assets: $1,500 (from additional information).
- Net change in investments: $138,000 - $114,000 = $24,000.
b. Calculate net cash used in investing activities.
Step 3: Determine the net cash from financing activities
a. Analyze changes in the liabilities and equity accounts:
- Decrease in bonds payable: $150,000 - $110,000 = $40,000.
- Increase in common stock: $220,000 - $175,000 = $45,000.
- Increase in retained earnings: $224,000 - $105,450 = $118,550.
- Dividends paid: $40,350 (from additional information).
b. Calculate net cash provided by financing activities.
Step 4: Prepare the statement of cash flows
Using the information calculated in steps 1, 2, and 3, prepare the statement of cash flows with the following sections:
- Cash flows from operating activities
- Cash flows from investing activities
- Cash flows from financing activities
- Net increase in cash
- Cash at beginning of the year
- Cash at end of the year.
I hope this explanation helps you in preparing the statement of cash flows using the indirect method for Arma Inc. If you have any further questions or need additional help, please let me know.