Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow. GALLEY CORPORATION Comparative Balance Sheets December 31, 2011 and 2010 2011 2010 Assets Cash $ 87,000 $ 117,000 Accounts receivable 84,000 71,000 Merchandise inventory 620,000 515,000 Equipment 335,000 269,000 Accum. depreciation—Equipment (157,000) (101,000) Total assets $ 969,000 $ 871,000 Liabilities and Equity Accounts payable $ 66,000 $ 90,000 Income taxes payable 22,000 19,000 Common stock, $2 par value 596,000 568,000 Paid-in capital in excess of par value, common stock 203,000 161,000 Retained earnings 82,000 33,000 Total liabilities and equity $ 969,000 $ 871,000 GALLEY CORPORATION Income Statement For Year Ended December 31, 2011 Sales $ 1,798,000 Cost of goods sold 1,088,000 Gross profit 710,000 Operating expenses Depreciation expense $ 56,000 Other expenses 499,000 555,000 Income before taxes 155,000 Income taxes expense 21,000 Net income $ 134,000 Additional Information on Year 2011 Transactions a. Purchased equipment for $66,000 cash. b. Issued 14,000 shares of common stock for $5 cash per share. c. Declared and paid $85,000 in cash dividends. Required: Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

 

GALLEY CORPORATION Comparative Balance Sheets December 31, 2011 and 2010
	2011			2010
Assets
Cash	$	87,000		$	117,000
Accounts receivable		84,000			71,000
Merchandise inventory		620,000			515,000
Equipment		335,000			269,000
Accum. depreciation—Equipment		(157,000)			(101,000)
Total assets	$	969,000		$	871,000
Liabilities and Equity
Accounts payable	$	66,000		$	90,000
Income taxes payable		22,000			19,000
Common stock, $2 par value		596,000			568,000
Paid-in capital in excess of par value, common stock		203,000			161,000
Retained earnings		82,000			33,000
Total liabilities and equity	$	969,000		$	871,000

  

GALLEY CORPORATION Income Statement For Year Ended December 31, 2011
Sales				$	1,798,000
Cost of goods sold					1,088,000
Gross profit					710,000
Operating expenses
Depreciation expense	$	56,000
Other expenses		499,000			555,000
Income before taxes					155,000
Income taxes expense					21,000
Net income				$	134,000

 

Additional Information on Year 2011 Transactions
a.	Purchased equipment for $66,000 cash.
b.	Issued 14,000 shares of common stock for $5 cash per share.
c.	Declared and paid $85,000 in cash dividends.

    

Required:

Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)