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Statement of Cash Flow: Grant Wood

(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.

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