Exercise 8: Preparing the Statement of cash Flows: Indirect Method_Keeper Cooperation

| June 11, 2016

Question
Exercise 8:Preparing the Statement of cash Flows: Indirect Method

Keeper Cooperation?s income statement for the year ended June 30, 2014, and its comparative balance sheets for June 30, 2014 and 2013 follow.

Keeper Corporation

Income Statement

For the Year Ended June 30, 2014

Sales $234,000

Cost of goods sold 156,000

Gross Margin $78,000

Operating expenses 45,000

Operating income $33,000

Interest expense 2,800

Income before income taxes $30,200

Income taxes expense 12,300

Net income $17,900

Keeper Corporation

Comparative Balance Sheets

June 30, 2014 and 2013

2014 2013

Assets

Cash $69,900 $12,500

Accounts receivable (net) 21,000 26,000

Inventory 43,400 48,400

Prepaid Expenses 3,200 2,600

Furniture 55,000 60,000

Accumulated depreciation- furniture (9,000) (5,000)

Total Assets: $183,500 $144,500

Liabilities and Stockholders Equity

Accounts payable $13,000 $14,000

Income taxes payable 1,200 1,800

Notes payable (long-term) 37,000 35,000

Common stock, $10 par value 115,000 90,000

Retained earnings 17,300 3,700

Total liabilities and

stockholders equity $183,500 $144,500

Keeper issued a $22,000 note payable for purchase of furniture; sold at carrying value furniture that cost $27,000 with accumulated depreciation of $15,300; recorded depreciation on the furniture for the year, $19,300; repaid a note in the amount of $28,000; issued $25,000 of common stock at par value; and paid dividends of $4,300.

Prepare Keepers statement of cash flows for the year 2014 using the indirect method.

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