The following data are provided for John Mean Corporation.

Balance Sheet (December 31)

2019 2020

Cash $ 68,000 $ 69,000

A/R     24,000     34,000

Inventory     32,000     28,000

Investment (LT)     12,000     0

Fixed assets   160,000   186,000

Acc. Depreciation (96,000) (78,000)

Total assets $200,000 $239,000

A/P $ 38,000 $ 24,000

B/P     20,000      40,000

C/S   100,000    122,000

R/E     42,000      56,000

Treasury stock     0    (23,000)

Additional data for the period January 1, 2020 through December 31, 2020 are:

1. Sales on account, $140,000.
2. Purchases on account, $80,000.
3. Depreciation, $10,000.
4. Expenses paid in cash, $36,000 (including $8,000 of interest and $12,000 in taxes).
5. Decrease in Inventory, $4,000.
6. Disposition of fixed assets for $12,000 cash; cost $42,000 and two-thirds depreciated (loss or gain is included in income).
7. Acquisition of fixed assets for cash $8,000.
8. Fixed assets are exchanged for bonds payable of $60,000.
9. Disposition of investments for $18,000 cash.
10. Purchase of treasury stock for cash, $23,000.
11. Retire B/P by issuing C/S, $20,000.
12. Collections on A/R, $130,000.
13. Sold unused C/S for cash, $2,000.

Required:

1. Prepare a statement of cash flows using the INDIRECT method.
2. Prepare CFO using the DIRECT method.
3. Prepare an income statement for the year, 2020.
4. Which of these two statements, CFO or I/S better reflects profitability? Explain.
5. Suppose 50% of cash is operating. Calculate the change in NOA.

Answer rating: 100% (QA)

a Cash flow statement Indirect method Statement of Cash Flows Cash flows from operating activities Current year Net Income 1400000 Adjustments for Add Depreciation and Amortization 1000000 Add Loss on ... View the full answer