Accounting Problems and Excel Solutions 3

Edwards, Inc. has prepared the following comparative balance sheets
for 2003 and 2004:
2004 2003
————— ————
Cash $ 198,000 $102,000
Receivables 106,000 78,000
Inventory 100,000 120,000
Prepaid expenses 12,000 18,000
Plant assets 840,000 700,000
Accumulated depreciation (300,000) (250,000)
Patent 102,000 116,000
——————— —————
$1,058,000 $884,000

Accounts payable $ 102,000 $112,000
Accrued liabilities 40,000 28,000
Mortgage payable ——— 300,000
Preferred stock 350,000 ———
Additional paid-in capital——preferred 80,000 ———
Common stock 400,000 400,000
Retained earnings 86,000 44,000
——————— —————
$1,058,000 $884,000

1. The Accumulated Depreciation account has been credited only for
the depreciation expense for the period.

2. The Retained Earnings account has been charged for dividends of
$92,000 and credited for the net income for the year.

The income statement for 2004 is as follows:

Sales $1,320,000
Cost of sales 726,000
——————
Gross profit 594,000
Operating expenses 460,000
——————
Net income $ 134,000

INSTRUCTIONS
(a) From the information above, prepare a statement of cash flows
(indirect method) for Edwards, Inc. for the year ended
December 31, 2004.

(b) From the information above, prepare a schedule of cash provided
by operating activities using the direct method.