Question: Mortonson Company has not yet prepared a
Mortonson Company has not yet prepared a formal statement of cash flows for the 2012 fiscal year. Comparative balance sheets as of December 31, 2011 and 2012, and a statement of income and retained earnings for the year ended December 31, 2012, are presented below and on page 1492.
Instructions
Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and cost of goods sold. Do not prepare a reconciliation schedule.
Transcribed Image Text:
MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2012 ($000 OMITTED) Sales $3,800 Expenses Cost of goods sold $1,200 Salaries and benefits 725 Heat, light, and power Depreciation Property taxes 75 80 19 Patent amortization 25 Miscellaneous expenses 10 Interest 30 2,164 Income before income taxes 1,636 Income taxes 818 Net income 818 Retained earnings-Jan. 1, 2012 310 1,128 Stock dividend declared and issued 600 Retained earnings-Dec. 31, 2012 $ 528 MORTONSON COMPANY COMPARATIVE BALANCE SHEETS As OF DECEMBER 31 (S000 OMITTED) Assets 2012 2011 Current assets Cash $ 333 $ 100 U.S. Treasury notes (available-for-sale) Accounts receivable 10 50 780 500 Inventory 720 560 Total current assets 1,843 1,210 Long-term assets Land 150 70 600 Buildings and equipment Accumulated depreciation Patents (less amortization) 910 (200) (120) 105 130 Total long-term assets 965 680 Total assets $2,808 $1,890 Liabilities and Stockholders' Equity Current liabilities $ 420 $ 330 Accounts payable Income taxes payable Notes payable 40 30 320 320 Total current liabilities 780 680 Long-term notes payable-due 2014 200 200 Total liabilities 980 880 Stockholders' Equity Common stock 1,300 700 Retained earnings 528 310 Total stockholders' equity 1,828 1,010 Total liabilities and stockholders' equity $2,808 $1,890
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