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Presented below is information related to the operations of Tanner Corporation
Presented below is information related to the operations of Tanner Corporation.
December
2003 2002 2003
Cash $ 55,000 $ 40,000 Sales $380,000
Accounts receivable 60,000 48,000 Cost of goods sold 190,000
Inventory 30,000 22,000 Gross profit 190,000
Prepaid expenses 15,000 20,000 Depreciation expense 14,000
Land 39,000 20,000 Other operating expenses 143,000
Building 100,000 100,000 Income from operations 33,000
Accumulated depreciation— Loss on equipment sale 3,000
building (17,000) (8,000) Income before income taxes 30,000
Equipment 58,000 80,000 Income tax expense 9,000
Accumulated depreciation— Net income $ 21,000
equipment (15,000) (20,000)
Total $325,000 $302,000
Accounts payable $ 40,000 $ 29,000
Bonds payable 0 100,000
Common stock 200,000 100,000
Retained earnings 85,000 73,000
Total $325,000 $302,000
Additional information:
(a) In 2003, Tanner declared and paid a cash dividend.
(b) The company converted $100,000 of bonds into common stock.
(c) Equipment with a cost of $22,000 and a book value of $12,000 was sold for $9,000. Land was acquired for cash.
(d) Prepaid expenses pertain to operating expenses; accounts payable pertains to merchan-dise purchases.
Instructions: Solve either (a) or (b), but not both.
(a) Prepare a statement of cash flows in proper form for 2003, using the indirect method.
(b) Prepare a statement of cash flows in proper form for 2003, using the direct method
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