BUS 285-001, 002, 003 & 033 Final Examination - Winter 2012 Page 13 Question Four (20 Marks) Summarized financial statements for Butterfield Inc. (BI) appear below: Butterfield Inc. Comparative Balance Sheets December 31 2011 2010 Assets Cash Accounts receivable Inventory Prepaid expenses Property, plant and equipment Accumulated depreciation $102,700 80,800 111,900 94,500 290,000 (49,500) $630,400 $47,250 37,000 102,650 107,000 205,000 (40,000) $458.900 Liabilities and shareholders' equity Accounts payable Accrued expenses payable Notes payable, due December 31, 2015 Preferred shares Common shares Retained earnings $62,700 12,100 140,000 40,000 200,000 175,600 $630,400 $48.280 18,830 70,000 40.000 160,000 121,790 $458,900 Butterfield Inc. Statement of Earnings Year Ended December 31, 2011 $307,500 Sales Gain on sale of equipment 8.750 316,250 Expenses Cost of goods sold Operating expenses Depreciation expense Interest expense 99,460 24,670 58,700 10,440 193,270 122,980 32,670 $90.310 Earnings before income taxes Income tax expense Net earnings You are the accountant for BI and you have gathered the following additional information: New equipment with a cost of $141,000 was purchased for $71,000 cash and a $70,000 note payable was issued for the balance owing. Equipment with a cost of $56,000 was sold for $15,550, resulting in a gain of $8,750. Accounts payable relate only to the suppliers from which inventory was purchased. You have been asked to prepare the COMPLETE 2011 cash flow statement, preparing the operating activities section using the INDIRECT METHOD. Please ensure you provide all required disclosures and detailed supporting calculations (10 marks). (For the Winter 2017 semester, BUS 285 students are not responsible for the indirect method of preparing the operating activities section of the cash flow statement.)