Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented bel

Question

Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented below.

MARCUS INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2014 AND 2013

December 31

2014

2013

$41,610

$34,230

70,260

60,340

29,670

24,550

22,520

38,310

30,120

18,810

67,690

56,630

7,810

7,810

$269,680

$240,680

$2,340

$1,140

6,590

1,970

14,140

8,250

35,150

24,540

3,138

2,629

21,290

31,460

150,100

124,700

36,932

45,991

$269,680

$240,680

$536,268

380,540

155,728

120,420

35,308

$3,370

(887

2,483

$37,791

ALEXANDER CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2014
(Indirect Method)

Problem 23-6 Comparative balance sheet accounts of Marcus Inc. are presented below.

MARCUS INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2014 AND 2013

December 31

Debit Accounts

2014

2013

Cash

$41,610

$34,230

Accounts Receivable

70,260

60,340

Inventory

29,670

24,550

Investments (available-for-sale)

22,520

38,310

Machinery

30,120

18,810

Buildings

67,690

56,630

Land

7,810

7,810

$269,680

$240,680

Credit Accounts Allowance for Doubtful Accounts

$2,340

$1,140

Accumulated Depreciation—Machinery

6,590

1,970

Accumulated Depreciation—Buildings

14,140

8,250

Accounts Payable

35,150

24,540

Accrued Payables

3,138

2,629

Long-Term Notes Payable

21,290

31,460

Common Stock, no-par

150,100

124,700

Retained Earnings

36,932

45,991

$269,680

$240,680

Additional data (ignoring taxes):
1. Net income for the year was $37,791. 2. Cash dividends declared and paid during the year were $21,450. 3. A 20% stock dividend was declared during the year. $25,400 of retained earnings was capitalized. 4. Investments that cost $25,080 were sold during the year for $28,450. 5. Machinery that cost $4,060, on which $736 of depreciation had accumulated, was sold for $2,437.
Marcus’s 2014 income statement follows (ignoring taxes).
Sales revenue

$536,268

Less: Cost of goods sold

380,540

Gross margin

155,728

Less: Operating expenses (includes $11,246 depreciation and $5,140 bad debts)

120,420

Income from operations

35,308

Other: Gain on sale of investments

$3,370

          Loss on sale of machinery

(887

)

2,483

Net income

$37,791

(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Net cash flow from operating activities

$

(b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ALEXANDER CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2014
(Indirect Method)

$

Explanation / Answer

Solution:

Cash flow from Operating Activities using Indirect Method Net Income 37,791 Add: Loss on sale of machinery 887 Less: Gain on sale of investment -3,370 Add: Depreciation 11,246 Less: Increase in Accounts Receivables -7380 Less: Increase in inventory -5120 Add: Decrease in short term investments 15,790 Add: Increase in allowance for doubtful debts 1200 Add: Increase in accounts Payable 10610 Add: Increase in Accured Payables 509 Cash flow from operating activities 62,163

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