Use the Queen Supply Corp. data from P11-61A.

Requirements

1. Prepare the company’s 2018 statement of cash flows using the direct method.

2. How can the concepts used in this problem help you evaluate an investment?

Data from P11-61A

The 2018 and 2017 comparative balance sheets and 2018 income statement of Queen Supply Corp. follow:

Queen Supply had no noncash investing and financing transactions during 2018. During the year, there were no sales of land or equipment, no payment of notes payable, no retirements of stock, and no treasury stock transactions.

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A1 Queen Supply Corp. Comparative Balance Sheets December 31, 2018 Increase (Decrease) 2017 3 4 Current assets: Cash and cash equivalents Accounts receivable Inventories Prepaid expenses 9 Plant assets: Land 9,000 $ 8,800 42,000 8,200 43,300 13,400 5,000 (2,700) $ 17,800 $ 50,200 56,700 2,300 10 30,800 49,000 $ 249,200 $ 179,100 $ 70,100 68,500 53,700 37,700 4,700 Equipment, net 12 Total assets 11 13 Current liabilities: 14 Accounts payable Salary payable Other accrued liabilities $ 35,700 $ 26,500| $ 9,200 18,100 23,900 27,000 21,200 8,900 (2,700) 15 16 17 Long-term liabilities: Notes payable 38,000 18 65,000 27,000 19 Stockholders' equity: Common stock, no-par 64,400 19,200 $ 179,100 $ 70,100 20 Retained earnings 22 Total liabilities and stockholders' equity 88,000 12,300 $ 249,200 23,600 (6,900) 21 23 A1 Queen Supply Corp. Income Statement Year Ended December 31, 2018 2 Revenues: Sales revenue 4 Expenses: Cost of goods sold Salary expense Depreciation expense Other operating expense Interest expense Income tax expense Total expenses $ 439,000 $ 186,600 77,000 16,800 49,600 24,800 28,700 10 383,500 55,500 11 12 Net income 13 1231 567 co a OH 23