( a ) Dubois Inc . has $ 600,000 to invest . The company is trying to decide between two alternative uses of the funds . One alternative provides $ 80,000 at the end of each year for 12 years
( b ) Dubois Inc . has completed the purchase of new Dell computers . The fair value of the equipment is $ 824,150 . The purchase agreement specifies an immediate down payment of $ 200,000
( c ) Dubois Inc . loans money to John Kruk Corporation in the amount of $ 800,000 . Dubois acceptsan 8 % note due in 7 years with interest payable semiannually . After 2 years (
( d ) Dubois Inc . wishes to accumulate $ 1,300,000 by December 31 , 2022 , to retire bonds outstanding . Thecompany deposits $ 200,000 on December 31 , 2012 , which will earn interest at 10 %
P23-7 ( SCF — Direct and Indirect Methods from Comparative Financial Statements ) Chapman Company ,
a major retailer of bicycles and accessories , operates several stores and is a publicly traded company .
The comparative balance sheet and income statement for Chapman as of May 31 , 2012 , are shown on thenext page . The company is preparing its statement of cash flows .
( a ) Compare and contrast the direct method and the indirect method for reporting cash flows from operating activities .
The direct method reports the net cash flows from operations as consolidated points . That means the cash collected from customers along with the cash generated from interest and dividends are reported under a single item
( b ) Prepare a statement of cash flows for Chapman Company for the year ended May 31 , 2012 , using the direct method . Be sure to support the statement P5-7 .