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Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented below. MARCUS INC. COMPARATIVE BALANCE...

Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented below.

MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2014 AND 2013

December 31

Debit Accounts 2014 2013

Cash $42,420 $34,240

Accounts Receivable 70,610 59,510

Inventory 29,940 24,920

Investments (available-for-sale) 22,340 38,230

Machinery 30,420 19,150

Buildings 67,150 56,580

Land 7,650 7,650

$270,530 $240,280

Credit Accounts

Allowance for Doubtful Accounts $2,720 $1,420

Accumulated Depreciation—Machinery 5,710 2,000

Accumulated Depreciation—Buildings 13,560 8,780

Accounts Payable 35,160 24,070

Accrued Payables 3,170 2,744

Long-Term Notes Payable 21,290 31,160

Common Stock, no-par 149,700 125,400

Retained Earnings 39,220 44,706

$270,530 $240,280

Additional data (ignoring taxes):

1. Net income for the year was $39,794.

2. Cash dividends declared and paid during the year were $20,980.

3. A 20% stock dividend was declared during the year. $24,300 of retained earnings was capitalized.

4. Investments that cost $24,900 were sold during the year for $28,140.

5. Machinery that cost $3,460, on which $785 of depreciation had accumulated, was sold for $1,779.

Marcus’s 2014 income statement follows (ignoring taxes).

Sales revenue $536,850

Less: Cost of goods sold 379,090

Gross margin 157,760

Less: Operating expenses (includes $9,275 depreciation and $5,180 bad debts) 120,310

Income from operations 37,450

Other: Gain on sale of investments $3,240

Loss on sale of machinery (896 ) 2,344

Net income $39,794

(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Net cash flow from operating activities $ (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Expert Solution

ekkarill92 answered 2 years ago

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