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Cash Flows and Indirect Method

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Statement of Cash Flows

The management of Banciu Corporation provides you with the comparative analysis of changes
in account balances between December 21, 2010, and December 31, 2011, appearing below.

___________December 31,____________________ December 31, ___________
2011 2010
Debit balances
Accounts receivable $306,000 $327,600
Cash 174,000 223,200
Inventories 579,600 645,600
Leasehold improvements 104,400 104,400
Machinery and equipmen t 1,112,400 776,400
Patents 33,360 36,000
Totals $2,489,760 $2,113,200

Credit balances
Accounts payable $279,360 $126,000
Accumulated amoritization of leasehold
improvements 69,600 58,800
Accumulated depreciation of machinery
and equipment 499,200 446,400
Allowance for uncollectible accounts 19,200 20,400
Cash dividend paybale 48,000 0
Common stock 600,000 600,000
Current portion of 6% serial bonds payable 60,000 60,000
Preferred stock 108,000 120,000
Retained earnings 506,400 321,600
6% Serial bonds payble - noncurrent portion 300,000 360,000
Totals $2,489,760 $2,113,200

Supplemental Information:
a. The following table prsents a comparative analysis of ratained earnings as of December 31, 2010, and December 31, 2011.

___________________________________ December 31,____________
2011 2010
Beginning balance $321,600 $157,200
Net Income 234,000 206,400
555,600 363,600
Dividends declared -48,999 -42,000
Premium on repurchased preferred stock -1,200 0
Ending balance $506,400 $321,600

b. On december 10, 2011, the board of directors declared a cash dividend of $0.24 per share, payable to holders of
common stock on January 10, 2012.
c. Purchased new machinery for $463,000. In addition, Banciu sold certain machinery it was no longer using for $57,600.
The machinery had a carryoing value of $73,200. Banciu made no other entries in Machinery and equipment or related
accounts other than for depreciation.
d. Purchased 120 preferred shares, par value $100, at $110 and subsequently canceled the shares. Banciu debited the
premium paid to Retained earnings.
e. Paid $2,400 of legal costs in successful defense of a new patent, which ir correctly debited to the Patents account.
It recorded patent amortization amounting to $4,040 during the year ended December 31, 2011.
f. During 2011, Banciu wrote off accountrs receivable totaling $3,600 as uncollectible.

1. Prepare the entries (in general journal form) that would be entered into T-accounts needed to prepare a statement of
cash flows from the data given.

2. Prepare a statement of cash flows for Banciu Corporation for 2011. Use the indirect method for presenting cash flow from operations

$2.19