Condensed financial data of Pat Metheny Company for 2014 and 2013 are presented

Question

Condensed financial data of Pat Metheny Company for 2014 and 2013 are presented below.

PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2014 AND 2013

2014

2013

$1,791

$1,100

1,752

1,291

1,591

1,918

1,894

1,693

(1,193

)

(1,176

)

1,299

1,473

$7,134

$6,299

$1,201

$786

212

245

1,419

1,635

1,906

1,700

2,396

1,933

$7,134

$6,299

PAT METHENY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014

$6,803

4,694

2,109

923

1,186

80

1,266

534

269

$463

Additional information:

During the year, $62 of common stock was issued in exchange for plant assets. No plant assets were sold in 2014.

Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -25,000 or in parenthesis e.g. (25,000).)

PAT METHENY COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
(Direct Method)

PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2014 AND 2013

2014

2013

Cash

$1,791

$1,100

Receivables

1,752

1,291

Inventory

1,591

1,918

Plant assets

1,894

1,693

Accumulated depreciation

(1,193

)

(1,176

)

Long-term investments (held-to-maturity)

1,299

1,473

$7,134

$6,299

Accounts payable

$1,201

$786

Accrued liabilities

212

245

Bonds payable

1,419

1,635

Capital stock

1,906

1,700

Retained earnings

2,396

1,933

$7,134

$6,299

Explanation / Answer

Statement of Cash Flows (Direct Method) PAT METHENY COMPANY Statement of Cash Flows For the Year Ended December 31, 2014 2014 Cash Flows from Operating Activities Collections $6,342 Payments to Suppliers -$3,952 Payments for accred liability -956     Income taxes paid -534 Net Cash from Operating Activities $900 Cash Flows from Investing Activities Decrease in Investments $254 Purchase of Plant assets -122 Net Cash Used for Investing Activities $132 Cash Flows from Financing Activities RePayment of Bonds -$216     Dividend paid -269    Fresh capital stock issued 144 Net Cash from Financing Activities -$341 NET INCREASE/(DECREASE) IN CASH $691 CASH, BEGINNING OF YEAR 1100 CASH, END OF YEAR $1,791 Collections = Opening receivables + Sales - closing receivables 1291 + 6803 - 1752 = 6342 Payment to suppliers = opening payables + Purchases - closing payables 786 + 4367 - 1201 = 3952 Cost of goods sold = opening inventory + Purchases - closing inventory Hence , purchases = Cost of goods sold - opening inventory + closing inventory Purchases = 4694 - 1918 + 1591 = 4367 Payment of accrued liability = opening liability + selling & administrative expenses - closing liabiliyu        = 245 + 923 - 212 = 956 Closing plant asset   = 1894-1193 = 701 Less : Opening plant assets = 1693 -1176 = 517 Less : bought against common stock = 62 Plant asset bought for cash = 122 Cash from sale of investment = opening investment - closing investment + gain from sale of investment                    = 1473 - 1299 + 80 = 254 Closing capital stock = 1906 Less : opening capital stock = 1700 Issued capital stock = 206 Less issued against plant asset = 62 Issued for cash 144

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