RAPTURE COMPANYIncome StatementFor Year Ended December 31, 2011Sales revenue $ 63,200,000Expenses Cost of goods sold 22,000,000Depreciation expense 4,500,000Salaries expense 11,000,000Rent expense 3,000,000Insurance expense 1,500,000Interest expense 1,700,000Utilities expense 1,600,000Net income $ 17,900,000RAPTURE COMPANYSelected Balance Sheet AccountsAt December 31 2011 2010 Accounts receivable $ 380,000 $ 394,000 Inventory 103,000 82,000 Accounts payable 125,000 134,000 Salaries payable 44,000 30,000 Utilities payable 12,000 9,000 Prepaid insurance 15,000 17,000 Prepaid rent 13,000 16,000 Required:Prepare the cash flows from operating activities section only of the companyâs 2011 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)RAPTURE COMPANYCash Flows from Operating ActivitiesâIndirect MethodFor Year Ended December 31, 2011Cash flows from operating activities $Adjustments to reconcile net income to net cash provided by operating activities $Net cash operating activities $Problem 16-4A Statement of cash flows (indirect method) L.O. P1, P2, P3Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The companyâs balance sheets and income statement follow.GALLEY CORPORATIONComparative Balance SheetsDecember 31, 2011 and 20102011 2010Assets Cash $ 170,000 $ 140,000Accounts receivable 85,000 72,000Merchandise inventory 620,000 525,000Equipment 325,000 278,000Accum. depreciationâEquipment (157,000) (100,000)Total assets $ 1,043,000 $ 915,000Liabilities and Equity Accounts payable $ 147,000 $ 139,000Income taxes payable 26,000 23,000Common stock, $2 par value 590,000 562,000Paid-in capital in excess of par value, common stock 198,000 156,000Retained earnings 82,000 35,000Total liabilities and equity $ 1,043,000 $ 915,000GALLEY CORPORATIONIncome StatementFor Year Ended December 31, 2011Sales $ 1,794,000Cost of goods sold 1,088,000Gross profit 706,000Operating expenses Depreciation expense $ 57,000Other expenses 494,000 551,000Income before taxes 155,000Income taxes expense 23,000Net income $ 132,000Additional Information on Year 2011 Transactionsa. Purchased equipment for $47,000 cash.b. Issued 14,000 shares of common stock for $5 cash per share.c. Declared and paid $85,000 in cash dividends.Required:Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)GALLEY CORPORATIONStatement of Cash FlowsFor Year Ended December 31, 2011Cash flows from operating activities $Adjustments to reconcile net income to netcash provided by operating activities: Net cash operating activities $Cash flows from investing activities Cash flows from financing activities Net cash financing activities $Cash balance at beginning of 2011 Cash balance at end of 2011 $
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