Country Vista Company_Statement of cash flows

Country Vista Company_Statement of cash flows

Question

Download and review the income statement for the Country Vista Company. You will use the income statement to help you complete Part 1 and Part 2 below.

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Country Vista Company

Income Statement

For the Year Ended December 31, 2011

Sales

$2,48,000

Cost of Goods Sold

$1,16,000

Gross Profit

$1,32,000

Operating Expenses

Wages and Salaries Expense

$44,000

Rent Expense

$16,000

Depreciation Expense

$30,000

Other Operating Expenses

$18,000

$1,08,000

Income from Operations

$24,000

Gain on Sale of Equipment

$26,000

Income before Income Taxes

$50,000

Income Tax Expense

$17,500

Net Income

$32,500

Part 1: Indirect Method

Using Excel, prepare the Statement of Cash Flows Indirect Method. Your SOCF should be based upon the income statement and the additional information below:

Additional Information:

· Increase in Accounts Receivables=$4,000

· Increase in Accounts Payables=$16,000

· Increase in Income Taxes Payable=$300

· Decrease in Prepaid Expenses=$10,000

· Decrease in Merchandise Inventory=$14,000

· Decrease in Long Term Notes Payable=$20,000

· Cash Paid to Purchase Land=$50,000

· Cash Paid to Purchase Equipment=$15,000

· Cash Paid to Retire Bonds=$25,000

· Cash Paid to for Dividends=$10,000

· Cash Received from the Sale of common stock=$50,000

· Cash at the start of the year=$24,000

Part 2: Direct Method

Using Excel and the below information please prepare the complete statement of cash flows using the direct method.

Additional Information:

· Cash Received from Customers=$80,000

· Cash Payments for Merchandise=$10,000

· Cash Payments for Operating Expenses=$5,000

· Cash payments for Interest=$6,000

· Cash Payments for Income Taxes=$3,000