Question: Problem 12-8A Prepare a Statement of Cash Flows [LO1, LO2] A comparative balance sheet and income statement for Eaton Company follow: Eaton Company Comparative Balance
Problem 12-8A Prepare a Statement of Cash Flows [LO1, LO2]
A comparative balance sheet and income statement for Eaton Company follow:
Eaton Company
Comparative Balance Sheet
December 31, 2011 and 2010
2011 2010
Assets
Cash $ 50 $ 18
Accounts receivable 306 228
Inventory 155 195
Prepaid expenses 9 5
Total current assets 520 446
Property, plant, and equipment 534 454
Less accumulated depreciation 86 70
Net property, plant, and equipment 448 384
Long-term investments 25 31
Total assets $ 993 $ 861
Liabilities and Stockholders' equity Accounts payable $ 304 $ 224
Accrued liabilities 71 78
Income taxes payable 75 65
Total current liabilities 450 367
Bonds payable 196 171
Total liabilities 646 538
Common stock 207 227
Retained earnings 140 96
Total stockholders equity 347 323
Total liabilities and stockholders' equity $ 993 $ 861
Eaton Company
Income Statement
For the Year Ended December 31, 2011
Sales $ 751
Cost of goods sold 445
Gross margin 306
Selling and administrative expenses 222
Net operating income 84
Nonoperating items: Gain on sale of investments $ 6
Loss on sale of equipment (2) 4
Income before taxes 88
Income taxes 24
Net income $ 64
During 2011, Eaton sold some equipment for $19 that had cost $31 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $12 that had cost $6 when purchased several years ago. A cash dividend was paid during 2011 and the company, repurchased $20 of its own stock. Eaton did not retire any bonds during 2011.
Required: 1. Using the indirect method, determine the net cash for operating activities for 2011. (Negative amount should be entered with a minus sign.) Net cash operating activities $
2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for 2011. (Amounts to be deducted and negative amounts should be indicated with a minus sign.)
Eaton Company
Statement of Cash Flows
For the Year Ended December 31, 2011
Operating activities:
$
Adjustments to convert net income to cash basis: $
Net cash operating activities Investing activities: Net cash investing activities Financing activities: Net cash financing activities Cash balance, January 1, 2011 Cash balance, December 31, 2011 $
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