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    Statement of cash flows and a balance sheet

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    Lansbury Inc. had the following balance Sheet at December 31, 2009.

    LANSBURY INC.
    BALANCE SHEET
    DECEMBER 31, 2009

    Cash $ 20,000 Accounts payable $ 30,000
    Accounts receivable 21,200 Long-term notes payable 41,000
    Investments 32,000 Common stock 100,000
    Plant assets (net) 81,000 Retained earnings 23,200
    Land 40,000 $194,200
    $194,200

    During 2010 the following occurred.
    1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available-for-sale.
    2. A tract of land was purchased for $18,000 cash.
    3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash.
    4. An additional $20,000 in common stock was issued at par.
    5. Dividends totaling $8,200 were declared and paid to stockholders.
    6. Net income for 2010 was $32,000 after allowing for depreciation of $11,000.
    7. Land was purchased through the issuance of $30,000 in bonds.
    8. At December 31, 2010, Cash was $32,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000.

    Instructions
    (a) Prepare a statement of cash flows for 2010.
    (b) Prepare an unclassified balance sheet as it would appear at December 31, 2010.
    (c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.

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