Condensed financial data of Drake Company appear below: DRAKE COMPANY Comparative Balance Sheet December 31 2019 2018 Assets Cash $ 41,000 $ 35,000 Accounts receivable 75,000 53,000 Inventories 120,000 132,000 Prepaid expenses 19,000 25,000 Investments 100,000 75,000 Plant assets 325,000 250,000 Accumulated depreciation (65,000) (60,000) Total $615,000 $510,000 Liabilities and Stockholders' Equity Accounts payable $ 93,000 $ 75,000 Accrued expenses payable 29,000 24,000 Bonds payable 120,000 160,000 Common stock 275,000 170,000 Retained earnings 98,000 81,000 Total $615,000 $510,000 DRAKE COMPANY Income Statement For the Year Ended December 31, 2019 Sales $450,000 Less: Cost of goods sold $300,000 Operating expenses (excluding depreciation) 60,000 Depreciation expense 17,000 Income taxes 20,000 Interest expense 18,000 Loss on sale of plant assets 3,000 418,000 Net income $ 32,000 Additional information: New plant assets costing $100,000 were purchased for cash in 2019. Old plant assets costing $25,000 were sold for $10,000 cash when book value was $13,000. Bonds with a face value of $40,000 were converted into $40,000 of common stock. A cash dividend of $15,000 was declared and paid during the year. Accounts payable pertain to merchandise purchases. Instructions Prepare a statement of cash flows for the year using the direct method or the indirect method
Condensed financial data of Drake Company appear below:
DRAKE COMPANY
Comparative Balance Sheet
December 31
2019 2018
Assets
Cash $ 41,000 $ 35,000
Inventories 120,000 132,000
Prepaid expenses 19,000 25,000
Investments 100,000 75,000
Plant assets 325,000 250,000
Total $615,000 $510,000
Liabilities and
Accounts payable $ 93,000 $ 75,000
Accrued expenses payable 29,000 24,000
Bonds payable 120,000 160,000
Common stock 275,000 170,000
Total $615,000 $510,000
DRAKE COMPANY
Income Statement
For the Year Ended December 31, 2019
Sales $450,000
Less:
Cost of goods sold $300,000
Operating expenses (excluding depreciation) 60,000
Depreciation expense 17,000
Income taxes 20,000
Interest expense 18,000
Loss on sale of plant assets 3,000 418,000
Net income $ 32,000
Additional information:
- New plant assets costing $100,000 were purchased for cash in 2019.
- Old plant assets costing $25,000 were sold for $10,000
cash when book value was $13,000. - Bonds with a face value of $40,000 were converted into $40,000 of common stock.
- A cash dividend of $15,000 was declared and paid during the year.
- Accounts payable pertain to merchandise purchases.
Instructions
Prepare a statement of cash flows for the year using the direct method or the indirect method
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