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The statement of earnings for Hanalei International Inc. is presented here:
HANALEI INTERNATIONAL INC.
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Question & Answer: The statement of earnings for Hanalei International Inc. is presented here:…..
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Statement of earnings
Year Ended December 31, 2009
| Fee Revenue | $565,000 | |
| Operating Expenses | 390,000 | |
| Earnings from Operations | 175,000 | |
| Other revenue and expenses | ||
| Gain on Sale of Equipment | $25,000 | |
| Interest Expense | (10,000) | 15,000 |
| Earnings before income taxes | 190,000 | |
| Income Tax Expense | 47,500 | |
| Net Earnings | $142,500 |
Hanalei’s balance sheet contained these comparative data at December 31:
| 2009 | 2008 | |
| Accounts Receivable | $50,000 | $60,000 |
| Prepaid Insurance | 8,000 | 5,000 |
| Accounts Payable | 30,000 | 41,000 |
| Unearned Revenue | 10,000 | 14,000 |
| Interest Payable | 2,000 | 750 |
| Income Tax Payable | 4,000 | 3,500 |
Additional Information:
1. Operating expenses include $45,000 of depreciation expense and $5,000 of amortization expense
2. Interest expense includes $500 related to the amortization of a bond discount on bonds payable
3. Accounts payable relate to operating expenses
**Instructions: prepare the operating activities section of the cash flow statement, using the indirect method.
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