Condensed financial data of Arma Inc. follow. - 10367

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Question 5


 

 

 



Correct.

 

 

 

Condensed financial data of Arma Inc. follow.

 

 

 

ARMA INC.

Comparative Balance Sheets

December 31

Assets

2011

 

2010

Cash

$90,800 

 

$48,400 

Accounts receivable

92,800 

 

33,000 

Inventories

112,500 

 

102,850 

Prepaid expenses

28,400 

 

26,000 

Investments

138,000 

 

114,000 

Plant assets

270,000 

 

242,500 

Accumulated depreciation

(50,000)

 

(52,000)

     Total

$682,500 

 

$514,750 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

Accounts payable

$112,000

 

$67,300

Accrued expenses payable

16,500

 

17,000

Bonds payable

110,000

 

150,000

Common stock

220,000

 

175,000

Retained earnings

224,000

 

105,450

     Total

$682,500

 

$514,750

 

 

 

ARMA INC.

Income Statement

For the Year Ended December 31, 2011

Sales

 

 

$392,780

Less:

 

 

 

   Cost of goods sold

$135,460

 

 

   Operating expenses, excluding depreciation

12,410

 

 

   Depreciation expense

46,500

 

 

   Income taxes

27,280

 

 

   Interest expense

4,730

 

 

   Loss on sale of plant assets

7,500

 

233,880

Net income

 

 

$158,900

 

Additional information:

 

  1. New plant assets costing $85,000 were purchased for cash during the year.
  2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.
  3. Bonds matured and were paid off at face value for cash.
  4. A cash dividend of $40,350 was declared and paid during the year.

 

Further analysis reveals that accounts payable pertain to merchandise creditors.

 

Complete the statement of cash flows for Arma Inc. using the direct method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow for financing and investing activities, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List all other amounts as positive.)

 

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