The Following Data Is Provided:
Income Statement
for the Year

question 45

Essay

The following data is provided:
Income Statement
For the Year Ended Dec. 31, 2011 $\begin{array} { | l | l | } \hline \text { Net sales } & \$ 375,000 \\\hline \text { Cost of goods sold } & ( 200,000 ) \\\hline \text { Cash operating expenses } & ( 100,000 ) \\\hline \text { Depreciation and amortization expense } & ( 25,000 ) \\\hline \text { Gain on sale of equipment } & 15,000 \\\hline \text { Net income } & \$ 65,000 \\\hline\end{array}$
Additional information: $\begin{array} { | l | l | } \hline \text { 1. Increase in accounts receivable during2011 } & \$ 10,000 \\\hline \text { 2. Decrease in inventory during 2011 } & \$ 7,500 \\\hline \text { 3. Increase in accounts payable during 2011 } & \$ 11,000 \\\hline \text { 4. Sale of old equipment for cash } & \$ 32,500 \\\hline \text { 5. Dividends declared - } \$ 22,500 \text {; dividends paid } & \$ 20,000 \\\hline \text { 6. New building acquired by issuing common shares } & \$ 21,000 \\\hline \text { 7. Sold bonds for cash - proceeds of } & \$ 37,500 \\\hline\end{array}$ Required:
Prepare a Statement of Cash Flows, direct method. Include a reconciliation of earnings and net operating cash flow.

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Definitions:

Private Parties

Refers to individuals or entities that are not part of the government or public sector, engaging in activities or agreements among themselves.

Government Initiated

Actions or policies started by a government agency or institution to address specific issues or regulate behavior.

Duty of Care

A legal obligation to adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.

Enron

A former American energy company that collapsed due to widespread corporate fraud and corruption.