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Stanley Company

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Stanley Company operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Stanley as of May 31, 2012, are shown below. The company is preparing its statement of cash flows.

Stanley Company
Comparative Balance Sheet
As of May 31
  2012 2011
Current Assets
Cash  $28,820  $21,310
Accounts receivable  74,890  57,740
Inventory  220,020  252,520
Prepaid expenses  8,996  7,006
Total current assets  332,726  338,576
Plant assets
Plants assets  598,430  501,650
Less accumulated depreciation - plant assets  152,200  124,780
Net plant assets  446,230  376,870
Total assets  $778,956  $715,446
Current Liabilities
Accounts payable  $123,900  $116,000
Salaries and wages payable  46,640  71,650
Interest payable  27,120  25,990
Total current liabilities  197,660  213,640
Long-term debt
Bonds payable  70,300  101,650
Total liabilities  267,960  315,290
Stockholders' equity
Common stock $10 par  370,000  280,000
Retained earnings  140,996  120,156
Total stockholders' equity  510,996  400,156
Total liabilities and stockholders' equity  $778,956  $715,446
Stanley Company
Income Statement
For the Year Ended May 31, 2012
Sales  $1,268,450
Cost of goods sold  715,460
Gross profit  552,990
Salaries and wages expense  251,460
Interest expense  71,450
Depreciation expense  27,420
Other expenses  8,824
Total expenses  359,154
Operating income  193,836
Income tax expense  48,459
Net income  $145,377

The following is additional information concerning Stanley's transactions during the year ended May 31, 2012.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, compromising the total accounts payable account.
3. Plant assets costing $96780 were purchase by paying $26680 in cash and issuing 7010 shares of stock.
4. The "other expenses" are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Stanley issued 1990 shares of common stock at par value.
7. Cash dividends of $124537 were declared and paid at the end of the fiscal year.

a) Prepare a statement of cash flows for Stanley Company for the year ended May 31, 2012, using the direct method of presentation. Be sure to support the statements with the appropriate calculations. (A reconciliation of net income to net cash is not required).

b) Using the indirect method, calculate only the net cash flow from operating activities for Stanley Company for the year ended May 31, 2012.

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