The comparative balance sheet of Rowe Products Inc. for December 31, 2013 and 2012, is as follows:

	Dec. 31, 2013	Dec. 31, 2012
Assets
Cash	$ 772,080	$ 815,280
Accounts receivable (net)	680,160	656,880
Inventories	1,213,200	1,179,360
Investments	0	288,000
Land	624,000	0
Equipment	1,056,000	816,000
Accumulated depreciation	(293,280)	(240,480)
	$4,052,160	$3,515,040
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors)	$ 926,160	$ 898,080
Accrued expenses payable (operating expenses)	76,080	84,960
Dividends payable	10,560	7,680
Common stock, $10 par	177,600	38,400
Paid-in capital in excess of par—common stock	369,600	230,400
Retained earnings	2,492,160	2,255,520
	$4,052,160	$3,515,040

The income statement for the year ended December 31, 2012, is as follows:

Sales		$7,176,000
Cost of merchandise sold		2,942,400
Gross profit		$4,233,600
Operating expenses:
Depreciation expense	$ 52,800
Other operating expenses	3,720,000
Total operating expenses		3,772,800
Operating income		$ 460,800
Other expense:
Loss on sale of investments		(76,800)
Income before income tax		$ 384,000
Income tax expense		123,360
Net income		$ 260,640

The following additional information was taken from the records:

a. Equipment and land were acquired for cash.

b. There were no disposals of equipment during the year.

c. The investments were sold for $211,200 cash.

d. The common stock was issued for cash.

e. There was a $24,000 debit to Retained Earnings for cash dividends declared.

Instruction

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

Answer rating: 100% (QA)

Cash Flow Statement is a financial statement which shows the inflows and outflows of cash and cash equivalents during a particular period It summarizes all the cash receipts and cash payments and clas... View the full answer