ARMA INC

Condensed financial data of Arma Inc. follow.

 ARMA INC.

 Comparative Balance Sheets

 December 31

  

 Assets 2011 2010

 Cash $ 90,800 $ 48,400

 Accounts receivable 92,800 33,000

 Inventories 112,500 102,850

 Prepaid expenses 28,400 26,000

 Investments 138,000 114,000

 Plant assets 270,000 242,500

 Accumulated depreciation (50,000) (52,000)

 Tota l $682,500 $514,750

 

 Liabilities and Stockholders’ Equity

 Accounts payable $112,000 $ 67,300

 Accrued expenses payable 16,500 17,000

 Bonds payable 110,000 150,000

 Common stock 220,000 175,000

 Retained earnings 224,000 105,450

 Total $682,500 $514,750

  ARMA INC.

 Income Statement

 For the Year Ended December 31, 2011

 Sales $392,780

 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 $158,900

  

 Additional information:

 1. New plant assets costing $85,000 were purchased for cash during the year.

 2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash.

 3. Bonds matured and were paid off at face value for cash.

 4. A cash dividend of $40,350 was declared and paid during the year.

 Instructions

 Prepare a statement of cash flows using the indirect method