ScholarMatic: Explanation & Answer
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The following information pertains to Surrey Honda Ltd., a local car dealership, for the year ended December 31, 2011: Surrey Honda Ltd. Balance Sheet December 31, 2011 (in thousands of $) 2011 2010 ASSETS Cash 526 482 Accounts receivable – net 175 185 Inventory 985 925 Long term investment 145 180 Land 425 350 Equipment 1,045 960 Accumulated amortization – equipment (350) (275) Total assets $ 2,951 $ 2,807 LIABILITIES AND OWNER’S EQUITY Accounts payable 321 850 Dividends payable 10 15 Current portion of long term debt 150 0 Long term note payable – 8% 300 0 Bond payable 500 500 Premium on bonds payable 14 18 Future income tax 85 70 Common stock 825 745 Retained earnings 746 609 Total liabilities and owner’s equity $ 2,951 $ 2,807 Surrey Honda Ltd. Income Statement Year Ended Dec. 31, 2011 (in thousands of $) NET SALES $ 1,875 COST OF GOODS SOLD 1,243 GROSS PROFIT 632 OPERATING EXPENSES Amortization of capital assets 123 Other 25 148 NET OPERATING INCOME 484 OTHER REVENUES AND EXPENSES Gain on disposal of long term investment 10 Gain on sale of equipment 15 Interest expense (65) NET INCOME BEFORE TAX 444 INCOME TAX (current and future) 133 NET INCOME $ 311 OTHER INFORMATION: 1. During 2011, the company purchased new equipment for $ 270,000 cash. Old equipment was sold for cash. 2. Common stock with a market value of $ 75,000 was issued in exchange for land during 2011. 3. $150,000 of the $450,000 long term note payable is due in 2009. 4. Cash dividends were declared and paid in 2011. No share dividends were declared. REQUIRED: Using the financial statements and information provided, prepare in good form the Statement of Cash Flows for Surrey Honda Ltd. for the year ended December 31, 2011 using the indirect method
ScholarMatic: Explanation & Answer
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