Use the Following Financial Statements and Additional Information to (1)

question 61

Essay

Use the following financial statements and additional information to (1) prepare a complete statement of cash flows for the year ended December 31, 2011. The cash provided or used by operating activities should be reported using the direct method, and (2) compute the company's cash flow on total assets ratio for 2011.
Additional Information
a. A $20,000 note payable is retired at its carrying amount in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid. Cash dividends paid is to be classified under financing activities.
c. New equipment is acquired for $120,000 cash.
d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.
e. Prepaid expenses relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.

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Definitions:

Relatively Elastic

Describes a situation where a small change in price leads to a larger change in quantity demanded or supplied.

Price Decline

A decrease in the cost of goods or services, often resulting from lower demand, increased supply, or external market factors.

Supply Curve

A curve that illustrates the supply for a product by showing how each possible price (on the vertical axis) is associated with a specific quantity supplied (on the horizontal axis).

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand.