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P13-9A Condensed financial data of Arma Inc. follows ARMA

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P13-9A Condensed financial data of Arma Inc. follows:

ARMA INC.
Comparative Balance Sheets
December 31

Assets 2011 2010
Cash
Accounts receivable
Inventories
Prepaid expenses
Investments
Plant assets
Accumulated depreciation
Total $ 90,800
92,800
112,500
28,400
138,000
270,000
(50,000)
$682,500 $ 48,400
33,000
102,850
26,000
114,000
242,500
(52,000)
$514,750
Liabilities and Stockholders’ Equity
Accounts payable
Accrued expenses payable
Bonds payable
Common Stock
Retained earnings
Total
$112,000
16,500
110,000
220,000
224,000
$682,500
$ 67,300
17,000
150,000
175,000
105,450
$514,750

ARMA INC.
Income Statement
For the Year Ended December 31, 2011

Sales
Less:
Cost of goods sold
Operating expenses, excluding
Depreciation
Depreciation expense
Income taxes
Interest expense
Loss on sale of plant assets
Net income

$135,460

12,410
46,500
27,280
4,730
7,500 $392,780







233,880
$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. (Cash from operations $185,250)

P13-10A Data for Arma Inc. are presented in P13-9A. Further analysis reveals the accounts payable pertain to merchandise creditors.

Instructions
Prepare a statement of cash flows for Arma Inc. using the direct method. (Cash from operations $185,250)

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