Question

Donellys, Inc. has prepared the following comparative balance sheets for 2007 and 2008: 2008 2007 Cash $ 297,000 $ 153,000 Receivables 159,000 107,000 Inventory 150,000 180,000 Prepaid expenses 18,000 27,000 Plant assets 1,260,000 1,050,000 Accumulated depreciation (450,000) (375,000) Patent, net (intangible asset) 153,000 174,000 $1,587,000 $1,316,000 Accounts payable $ 153,000 $ 168,000 Accrued liabilities 60,000 42,000 Bonds payable 0 450,000 Preferred stock 645,000 0 Common stock 600,000 600,000 Retained earnings 129,000 56,000 $1,587,000 $1,316,000 1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period. That is, there was no plant asset sold during 2008. 2. During 2008, new plant assets were purchased for $210,000. 3. No Patent was purchased or sold during 2008. For 2008 Year Net income $211,000 Net sales 1,980,000 COGS 1,089,000 Depreciation expense 75,000 Amortization of patents 21,000 Cash dividends declared and paid 138,000 Required: 1. Prepare a Statement of Cash Flows for Donellys, Inc. for the year 2008. (Use the indirect method.) 2. From the information provided, calculate the following items for the direct method. A. Cash received from customers. (Hint: Work on A/R account.) B. Cash paid to suppliers. (Hint: Work on Inventory and A/P accounts.)

Answer 1