Question

A comparative balance sheet and income statement for Groton Company follow:

Groton Company Comparative Balance Sheet December 31, 2011 and 2010
	2011		2010
Assets
Cash	$	2	$	13
Accounts receivable		310		231
Inventory		160		199
Prepaid expenses		10		8
Total current assets		482		451
Property, plant, and equipment		511		432
Less accumulated depreciation		(86)		(72)
Net property, plant, and equipment		425		360
Long-term investments		26		34
Total assets	$	933	$	845
Liabilities and Stockholders' equity
Accounts payable	$	302	$	226
Accrued liabilities		71		81
Income taxes payable		74		65
Total current liabilities		447		372
Bonds payable		200		174
Total liabilities		647		546
Common stock		165		204
Retained earnings		121		95
Total stockholders’ equity		286		299
Total liabilities and stockholders' equity	$	933	$	845

Groton Company Income Statement For the Year Ended December 31, 2011
Sales			$	757
Cost of goods sold				448
Gross margin				309
Selling and administrative expenses				222
Net operating income				87
Non operating items:
Gain on sale of investments	$	5
Loss on sale of equipment		(2)		3
Income before taxes				90
Income taxes				25
Net income			$	65

During 2011, Groton sold some equipment for $19 that had cost $31 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $13 that had cost $8 when purchased several years ago. A cash dividend was paid during 2011 and the company repurchased $39 of its own stock. Groton did not retire any bonds during 2011.

Required: 1. Using the indirect method, determine the net cash provided by/used by operating activities for 2011. (Negative amount should be entered with a minus sign.)

2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for 2011. (Amounts to be deducted and negative amounts should be indicated with a minus sign.)

Answer 1