Calculation of cash generated from operating activities

Refer to the financial statement information on the next two pages for Catalina, Inc, for fiscal year ended 12/31/2003. assume the following: Notes Payable are not related to amount owed to regular suppliers due to regular operations. Changes in Property, Plant, and Equipment accounts did involve cash. The only changes in accumulated depreciation were due to Depreciation Expense. Changes in Stockholders’ Equity accounts involved cash. The dividends were cash dividends declared and paid during the year.

Based upon this information, complete, in good form, the following for the 2003 fiscal year:

1. A schedule for the calculation of cash generated from operating activities under the direct method.

2. The complete Statement of Cash Flows by the direct method.

3. The Operating Activities section of the Statement of Cash Flows by the indirect method.

Catalina Inc.

Comparative Balance Sheet

December 31, 2003 and 2002

Assets 2003 2002

Current assets:

Cash $201,197 $212,000

Government Notes (cash equivalent) 5,700 20,000

Interest Receivable 385 700

Accounts receivable 535,800 506,000

Merchandise Inventory 613,394 675,120

Supplies and Prepayments 38,143 27,356

Total Current Assets $1,394,519 $1,441,176

Property, Plant and Equipment

Store Equipment $456,000 $388,000

Less Accum. Depr.-Store Equipment (171,000) (140,000)

Delivery Equipment 427,500 320,000

Less Accum. Depr.-Delivery Equip. (118,750) (80,000)

Office Equipment 361,000 339,900

Less Accum. Depr.-office Equip. (76,000) (61,000)

Total Property, Plant and Equip 878,750 766,900

Total Assets $2,273,269 2,208,076


Current Liabilities

Notes Payable $73,241 $118,000

Accounts Payable 230,153 384,470

Payroll Taxes Payable 9,300 15,200

Interest Payable 899 800

Total Liabilities $313,593 $518,470


Common Stock $990,000 $980,000

Paid – in-capital in excess of par-common st 390,500 390,000

Retained earnings 579,176 319,606

Total Stockholder’s Equity 1,959,676 $1,689,606

Total liabilities and Stockholder’s Equity $2,273,269 $2,208,076

Catalina, Inc.

Income Statement

For the Year Ended December 31, 2003

Net Sales $2,687,750

Cost of Goods Sold (1,264,673)

Gross Profit 1,423,077

Operating expenses (1,035,528)

Operating Income 387,549

Other Revenues and Expenses

Interest Revenue $1,008

Interest Expense (4,187) (3,179)

Net Income $384,370

Catalina, Inc.

Statement of Retained Earnings

For the Year Ended December 31, 2003

Retained Earnings, January 1 $319,606

Net income $384,370

Less Dividends (124,800)

Net Increase in Retained Earnings $259,570

Retained Earnings, December 31 $579,176



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