McPherson Construction Supply Company Financial Statements For the Year Ended December 31, 2011 2011 Balance

sheet at December 31: Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation Total Accounts payable Wages payable Notes payable, long-term Contributed capital Retained earnings Total Income statement for 2011: Sales Cost of goods sold Depreciation expense Other expenses Net income 34,000 45,000 31,000 121,000 30,000 201,000 36,000 1,200 38,000 88,600 37,200 201,000 2010 29,000 28,000 38,000 100,000 25,000 170,000 27,000 1,400 44,000 72,600 25,000 170,000 Change 5,000 17,000 (7,000) 21,000 5,000

9,000 (200) (6,000) 16,000 12,200

130,000 70,000 5,000 37,800 22,200

Additional data: Bought equipment for cash 21,000 Paid on long-term note payable 6,000 Issued new shares of stock for cash 16,000 Declared and paid cash dividend 10,000 Wage expense 20,000 Tax expense 6,000 Other expense 6,800 A/P include only inventory purchases made on credit

AP13-1
Requirement 1 McPherson Construction Supply Company Statement of Cashflows (Indirect Method) For the Year Ended December 31, 2011 (in US dollars) Cash Flow from Operating Activities Net Income Adjustments

22,200

Depreciation expense Decrease in accounts receivable Increase in merchandise inventory Decrease in accounts payable Increase in wages payable Net cash flow from operating activities Cash Flow from Investing Activities Purchase of equipment Net cash flow from investing activities Cash Flow from Financing Activities Repayment of loan principal Payment of dividends Proceeds from issuance of stock Net cash flow from financing activities Net increase in cash Beginning cash Ending cash

5,000 (17,000) 7,000 9,000 (200) 26,000

(21,000) (21,000)

(6,000) (10,000) 16,000 5,000 29,000 34,000

Requiremnet 2 The McPherson Construction Supply Company demonstrated an increase of cash of $5,000 for the year ended 2011. Operating activities provided a positive cash flow of $26,000, with another $16,000 coming from the issuance of stock. This activity gave McPherson Construction Supply Company the ability to purchase additional equipment, pay down the loan principle of $6,000, and issue dividends of $10,000 to its shareholders.

AP13-3
Requirement 1 McPherson Construction Supply Company Statement of Cashflows (Direct Method) For the Year Ended December 31, 2011 (in US dollars) Cash Flow from Operating Activities Collections from customers Payments to suppliers Payments to employees Payments for other Payments for taxes Net cash flow from operating activities

113,000 (54,000) (20,200) (6,800) (6,000) 26,000

Comments Sales revenue + Decrease in Accounts re COGS + Decrease in accounts payable + Other expenses - Increase in wages paya

Cash Flow from Investing Activities Purchase of equipment Net cash flow from investing activities Cash Flow from Financing Activities Repayment of loan principal Payment of dividends Proceeds from issuance of stock Net cash flow from financing activities Net increase in cash Beginning cash Ending cash

(21,000) (21,000)

(6,000) (10,000) 16,000

5,000 29,000 34,000

End cash = Beginning cash + Net Increas

AP13-3
Requirement 2 The McPherson Construction Supply Company demonstrated an increase of cash of $5,000 for the year ended 2011. Operating activities provided a positive cash flow of $26,000, with another $16,000 coming from the issuance of stock. This activity gave McPherson Construction Supply Company the ability to purchase additional equipment, pay down the loan principle of $6,000, and issue dividends of $10,000 to its shareholders.

rease in Accounts receivable accounts payable + Increase in inventory rease in wages payable

g cash + Net Increase.