Reference no: EM132386195

Question

Prepare statement of cash flows-indirect method.

The income statement and additional data of Rayborn Services, Inc., follow:

Revenues:

Sales Revenue 262,000

Dividend Revenue 11,000

Total Revenue 273,000

Expenses:

Cost of Goods Sold 107,000

Salary Expense 60,000

Depreciation Expense 18,000

Advertising Expense 14,000

Interest Expense 9,000

Income Tax Expense 8,000

Total Expenses 216,000

Net Income 57,000

Additional data follows:

A. Acquisition of plant assets totaled $116,000. Of this amount, $101,000 was paid in cash and a $15,000 note payable was isgned for the remainder.

B. Proceeds from the sale of land totaled $22,000. No gain was recognized on the sale.

C. Proceeds from issuance of common stock total $34,000.

D. Payment of long-term note payable was $15,000.

E. Payment of dividends was $14,000.

F. Data from the comparative balance sheet follow:

June 30 2010 2009

Current Assets:

Cash $30,000 $21,000

Accounts Receivable $42,000 $57,000

Inventory $89,000 $83,000

Current Liabilities:

Accounts Payable $38,000 $31,000

Accrued Liabilities $12,000 $20,000

Requirements:

Prepare Rayborn Services' statement of cash flow for the year ended April 30, 2010, using the indirect method.

Evaluate Rayborn Services' cash flow for the year. In your evaluation, mention all three categories of cash flows and give the reason for your evaluation.