arma inc.__ indirect and direct method cash flow — correct w/

Condensed financial data of Arma Inc. follow.  

ARMA INC.
Comparative Balance Sheets

December 31

Assets

2011

 

2010

Cash $90,800    $48,400 
Accounts receivable 92,800    33,000 
Inventories 112,500    102,850 
Prepaid expenses 28,400    26,000 
Investments 138,000    114,000 
Plant assets 270,000    242,500 
Accumulated depreciation

(50,000)

 

(52,000)

     Total

$682,500 

 

$514,750 

       
Liabilities and Stockholders’ Equity    
Accounts payable $112,000   $67,300
Accrued expenses payable 16,500   17,000
Bonds payable 110,000   150,000
Common stock 220,000   175,000
Retained earnings

224,000

 

105,450

     Total

$682,500

 

$514,750

ARMA INC.
Income Statement

For the Year Ended December 31, 2011

Sales     $392,780
Less:      
   Cost of goods sold $135,460    
   Operating expenses, excluding depreciation 12,410    
   Depreciation expense 46,500    
   Income taxes 27,280    
   Interest expense 4,730    
   Loss on sale of plant assets

7,500

 

233,880

Net income    

$158,900

  Additional information:  

  1. New plant assets costing $85,000 were purchased for cash during the year.
  2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.
  3. Bonds matured and were paid off at face value for cash.
  4. A cash dividend of $40,350 was declared and paid during the year.

   Complete the statement of cash flows using the indirect method and direct method







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