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    Statement of Cash Flow: Grant Wood

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    (Preparation of a Statement of Cash Flows and a Balance Sheet) Grant Wood Corporation's balance sheet at the end of 2006 included the following items.

    Current assets $235,000
    Land 30,000
    Building 120,000
    Equipment 90,000
    Accum.depr.-building (30,000)
    Accum.depr.-equipment (11,000)
    Patents 40,000
    Total $474,000

    Current liabilities $150,000
    Bonds payable 100,000
    Common stock 44,000
    Total $474,000

    The following information is available for 2007
    1. net income was $55,000
    2. equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $10,000
    3. depreciation expense was $4,000 on the building and $9,000 on equipment
    4. patent amortization was $2,500
    5. Current assets other than cash increased by $29,000. Current liabilities increased by $13,000
    6. an addition to the building was completed at a cost of $27,000
    7. a long-term investment in stock was purchased for $16,000
    8. bonds payable of $50,000 were issued
    9. Cash dividends of $30,000 were declared and paid
    10. Treasury stock was purchased at a cost of $11,000

    Instructions
    (Show only totals for current assets and current liabilities)
    a. prepare a statement of cash flows for 2007
    b. prepare a balance sheet at December 31, 2007

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    (Preparation of a Statement of Cash Flows and a Balance Sheet) Grant Wood Corporation's balance sheet at the end of 2006 included the following items.
    Current assets $235,000
    Land 30,000
    Building 120,000
    Equipment 90,000
    Accum.depr.-building (30,000)
    Accum.depr.-equipment (11,000)
    Patents 40,000
    Total $474,000

    Current liabilities $150,000
    Bonds payable 100,000
    Common stock 44,000
    Total $474,000

    The following information is available for 2007
    1. net income was $55,000
    2. equipment (cost $20,000 and accumulated depreciation $8,000) was sold for $10,000
    3. depreciation expense was $4,000 on the building and $9,000 on equipment
    4. patent amortization was $2,500
    5. Current assets other than cash increased by $29,000. Current liabilities increased by $13,000
    6. an addition to the building was completed at a cost of $27,000
    7. a long-term investment in stock was purchased for $16,000
    8. bonds payable of $50,000 were issued
    9. Cash dividends of $30,000 were declared and paid
    10. Treasury stock was purchased at a cost of $11,000

    a. Prepare a statement of cash flows for 2007

    Grant ...

    Solution Summary

    Using given information, shows how a Statement of Cash Flow and a Balance Sheet are derived. This example uses the Grant Wood Corporation, but should work for others as well.

    $2.19

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