The following comparative balance sheets are for Dells Corporation as of 2010 June 30, and 2009 June 30. Also provided is the statement of income and retained earnings for the year ended 2010 June 30, with additional data.
Dells Company
Comparative balance sheet
2010 June 30 and 2009
Increase (Decrease)
Accounts receivable, net
Property, plant, and equipment:
Accumulated depreciation – equipment
Total property, plant, and equipment
Liabilities and stockholders' equity
Notes payable – bank
Federal income taxes payable
Total current liabilities Stockholders' equity:
Common stock, $10 par
Paid-in capital in excess of par
Total stockholders' equity
Total liabilities and stockholders' equity
Dells Corporation
Statement of income and retained earnings
For the year ended 2010 June 30
Cost of goods sold
Salaries and wages expense
Loss on sale of equipment
Income before federal income taxes
Deduct: Federal income taxes
Retained earnings, 2009 July 1
Retained earnings, 2010 June 30
Equipment with a cost of USD 20,000, on which USD 10,000 of depreciation had been recorded, was sold for USD 3,000 cash. Additional equipment was purchased for USD 220,000.
Stock was issued for USD 250,000 cash.
The USD 50,000 bank note was paid. Using the data given for Dells Corporation:
a. Prepare a statement of cash flows - indirect method.
b. Prepare a working paper to convert net income from an accrual basis to a cash basis. Then prepare a partial statement of cash flows - direct method, showing only the cash flows from operating activities section.