P129A / Condensed financial data of Lemere Inc. follow.
LEMERE INC.Comparative Balance SheetsDecember 31
Assets / 2012 / 2011
Cash / $ 80,800 / $ 48,400
Accounts receivable / 87,800 / 38,000
Inventory / 112,500 / 102,850
Prepaid expenses / 28,400 / 26,000
Long-term investments / 138,000 / 109,000
Plant assets / 285,000 / 242,500
Accumulated depreciation / (50,000) / (52,000)
Total / $682,500 / $514,750
Liabilities and Stockholders’ Equity
Accounts payable / $102,000 / $ 67,300
Accrued expenses payable / 16,500 / 21,000
Bonds payable / 110,000 / 146,000
Common stock / 220,000 / 175,000
Retained earnings / 234,000 / 105,450
Total / $682,500 / $514,750
Liabilities and Stockholders’ Equity
Accounts payable / $102,000 / $ 67,300
Accrued expenses payable / 16,500 / 21,000
Bonds payable / 110,000 / 146,000
Common stock / 220,000 / 175,000
Retained earnings / 234,000 / 105,450
Total / $682,500 / $514,750

LEMERE INC.Income Statement DataFor the Year Ended December 31, 2012

Sales / $388,460
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 / $154,580

Additional information:

  1. New plant assets costing $100,000 were purchased for cash during the year.
  2. Old plant assets having an original cost of $57,500 and accumulated depreciation of $48,500 were sold for $1,500 cash.
  3. Bonds payable matured and were paid off at face value for cash.
  4. A cash dividend of $26,030 was declared and paid during the year.

Prepare a statement of cash flows—indirect method.

(SO 4), AP

Instructions

Prepare a statement of cash flows using the indirect method.

Cash from operations
$176,930
P1210A / Data for Lemere Inc. are presented in P12-9A. Further analysis reveals that accounts payable pertain to merchandise creditors.
Prepare a statement of cash flows—direct method.
(SO 6), AP

Instructions

Prepare a statement of cash flows for Lemere Inc. using the direct method.

Cash from operations
$176,930
P1211A / The comparative balance sheets for Vanco Company as of December 31 are presented below.
VANCO COMPANYComparative Balance SheetsDecember 31
Assets / 2012 / 2011
Cash / $ 68,000 / $ 45,000
Accounts receivable / 50,000 / 58,000
Inventory / 151,450 / 142,000
Prepaid expenses / 15,280 / 21,000
Land / 145,000 / 130,000
Equipment / 225,000 / 155,000
Accumulated depreciation—equipment / (45,000) / (35,000)
Buildings / 200,000 / 200,000
Accumulated depreciation—buildings / (60,000) / (40,000)
Total / $749,730 / $676,000
Liabilities and Stockholders’ Equity
Accounts payable / $ 44,730 / $ 36,000
Bonds payable / 300,000 / 300,000
Common stock, $1 par / 200,000 / 160,000
Retained earnings / 205,000 / 180,000
Total / $749,730 / $676,000

Additional information:

  1. Operating expenses include depreciation expense of $42,000.
  2. Land was sold for cash at book value.
  3. Cash dividends of $12,000 were paid.
  4. Net income for 2012 was $37,000.
  5. Equipment was purchased for $92,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $8,000 cash.
  6. 40,000 shares of $1 par value common stock were issued in exchange for land with a fair value of $40,000.

Prepare a statement of cash flows—indirect method.

(SO 4), AP

Instructions

Prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method.

Cash from operations
$94,000
P1212A / You are provided with the following transactions that took place during the year.
Transactions / Free Cash Flow ($125,000) / Current Cash Debt Coverage Ratio (0.5 times) / Cash Debt Coverage Ratio (0.3 times)
  1. Recorded credit sales $2,500.
  2. Collected $1,900 owed by customers.
  3. Paid amount owed to suppliers $2,750.
  4. Recorded sales returns of $500 and credited the customer’s account.
  5. Purchased new equipment $5,000; signed a long-term note payable for the cost of the equipment.
  6. Purchased a patent and paid $65,000 cash for the asset.

Identify the impact of transactions on ratios.

(SO 5), C

Instructions

For each transaction listed above, indicate whether it will increase (I), decrease (D), or have no effect (NE) on the ratios