Question:
SDPS Inc. provides airport transportation services in southern California. An income statement for 2011 and balance sheets for 2011 and 2010 appear below.
Required:
1. Prepare a statement of cash flows, using the indirect method to compute net cash flow from operating activities.
2. Explain what has been responsible for the decrease in cash.
3. Determine how SDPS financed its increase in net property, plant, and equipment during a period in which it had a substantial net loss.
Transcribed Image Text:
SDPS Inc. Balance Sheets December 31, 2011 and 2010 SDPS Inc. Income Statement For the Year Ended December 31, 2011 2011 2010 $937,000 Less operating expeses$278,000) 1229,000] (83,000) 82,000 Maenance expens 138,000] 215,000! Wages expense Rent expense Supplies expense Current assets: $ 40,000 126,000 11,000 $177,000 Depreciation expense (943,000) Accounts receivable Supplies, fuel 109,000 25,000 Income (loss) from Total current assets $216,000 operations 5 (6,000) Property, plant, and equipment: Other income lexpenses 5 524,000 174,000) Loss on disposal of Equipment, vehidles Accumulated $ 409,000 property, plant, and equipment3,000 depreciation 136 Net property, plant Interest expense 14,000 17,000) 350,000 $527,000 273,000 Net loss $489,000 Total assets UABILITIES AND EQUITY Additional information: Current liabilities: 1. Vehicles with a cost of $310,000 and a Accounts payable Wages payable Repair and maintenonce $103,000 22,000 58,000 29,000 depreciation of $177,000 were sold for $130,000 cash. New vehicles were purchased for $425,000 cash payable Rent payable 34,000 51,000 41,000 2. A $25,000 principal payment on the long-lerm note was made during 2011 No dividends were paid during 2011 Total current liabilities $258,000 $172,000 3. Long-term liabilities: Notes payable, long-tem 100,000 $358,000 125,000 $297,000 Total liabilities Equity Common stock Retained earnings $150,000 19,000 $150,000 42,000 169,000 527,000 Totol equity 192,000 $489,000 Total liabilities and equity