Problem 23-6_MARCUS INC_statement of cash flows

August 11th, 2017

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Problem 23-6

Comparative balance sheet accounts of Marcus Inc. are presented below.

MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2012 AND 2011
	December 31
Debit Accounts	2012	2011
Cash	$41,940	$33,490
Accounts Receivable	70,330	60,340
Inventory	29,850	24,210
Investments (available-for-sale)	22,460	38,200
Machinery	30,150	19,150
Buildings	67,150	56,070
Land	7,440	7,440
	$269,320	$238,900

Credit Accounts
Allowance for Doubtful Accounts	$2,850	$1,130
Accumulated Depreciationâ€”Machinery	6,280	2,160
Accumulated Depreciationâ€”Buildings	14,010	8,730
Accounts Payable	35,650	24,290
Accrued Payables	3,240	2,817
Long-Term Notes Payable	20,770	31,040
Common Stock, no-par	150,700	124,300
Retained Earnings	35,820	44,433
	$269,320	$238,900

Additional data (ignoring taxes):

1.		Net income for the year was $39,067.
2.		Cash dividends declared and paid during the year were $21,280.
3.		A 20% stock dividend was declared during the year. $26,400 of retained earnings was capitalized.
4.		Investments that cost $25,000 were sold during the year for $28,340.
5.		Machinery that cost $3,210, on which $727 of depreciation had accumulated, was sold for $1,662.

Marcus’s 2012 income statement follows (ignoring taxes).

Sales			$537,688
Less: cost of goods sold			380,630
Gross margin			157,058
Less: Operating expenses (includes $10,127 depreciation and $5,970 bad debts)			120,510
Income from operations			36,548
Other: Gain on sale of investments	$3,340
Loss on sale of machinery	(821	)	2,519
Net income			$39,067

(a)Compute net cash flow from operating activities using the direct method.

(b)Prepare a statement of cash flows using the indirect method.

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