ARMA INC

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)

  Tota l $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.

  Instructions

  Prepare a statement of cash flows using the indirect method