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the comparative balance sheet of gold medal sporting goods inc for december 31 2008 646160

The comparative balance sheet of Gold Medal Sporting Goods Inc. for December 31, 2008 and 2007, is as follows:

Dec. 31, 2008

 

Dec. 31, 2007

Assets

 

 

Cash

$ 391,100

$ 366,200

Accounts receivable (net)

142,400

130,600

Inventories

401,100

385,700

Investments

0

150,000

Land

205,000

0

Equipment

440,700

345,700

Accumulated depreciation—equipment

(104,000)

(92,500)

 

$1,476,300

$1,285,700

Liabilities and Stockholders’ Equity

 

 

Accounts payable (merchandise creditors)

$ 267,800

$ 253,100

Accrued expenses (operating expenses)

26,400

32,900

Dividends payable

15,000

12,000

Common stock, $10 par

80,000

60,000

Paid in capital in excess of par—common stock

300,000

175,000

Retained earnings

787,100

752,700

 

$1,476,300

$1,285,700

The income statement for the year ended December 31, 2008, is as follows:

Sales

 

$1,632,500

Cost of merchandise sold

 

908,300

Gross profit

 

$ 724,200

Operating expenses:

 

 

Depreciation expense

$ 11,500

 

Other operating expenses

609,000

 

Total operating expenses

 

620,500

Operating income

 

$ 103,700

Other income:

 

 

Gain on sale of investments

 

25,000

Income before income tax

 

$ 128,700

Income tax expense

 

34,300

Net income

 

$ 94,400

The following additional information was taken from the records:

a. The investments were sold for $175,000 cash.

b. Equipment and land were acquired for cash.

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

d. The common stock was issued for cash.

e. There was a $60,000 debit to Retained Earnings for cash dividends declared.

Instructions

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

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