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Prepare a Statement of Cash Flow Accounting Report statement showing the amount of cash flow from operations, cash flow related to investment activities, and cash flow associated with financing activities

Use the following information to prepare a Statement of Cash Flow Accounting Report. The indirect method should be used to find cash flow from operations.

ABC Corporation retails specialty chairs for individuals who like to change sitting positions rather frequently. ABC has been particularly profitable in recent years with the increased amount of time individuals spend at the PC keyboard. The balance sheet accounts for ABC as of December 31, 2006 and December 31, 2005 are presented below. Other information related to 2006 activities is also provided:

Assets 12/31/2006 12/31/2005

Cash $ 220,000 $ 100,000
Marketable Securities 300,000 0
Accounts Receivable 510,000 500,000
Chair Inventory 690,000 610,000
Long-term Investments 200,000 300,000
Plant Assets 1,700,000 1,000,000
Accumulated Depreciation (450,000) (450,000)
Patent 90,000 100,000

Liabilities & Stockholders' Equity

Accrued Liabilities 825,000 720,000
Notes Payable 295,000 0
Common Stock, $10 Par 800,000 700,000
Additional Paid-in Capital 400,000 250,000
Retained Earnings 940,000 490,000

Net Income for 2006 was $750,000
Cash Dividends of $300,000 were declared and paid in 2006.
A plant asset with an original cost of $500,000 and having a book value of $180,000, was sold in 2006 for $180,000.
A long-term investment was sold in 2006 for $160,000. There were no other transactions affecting long-term investments during 2006.
10,000 shares of common stock were issued in 2006 for $25 per share.

Management of ABC is interested in seeing a statement showing the amount of cash flow from operations, cash flow related to investment activities, and cash flow associated with financing activities.

Solution Summary

This solution explains how to prepare a statement of cash flow accounting.

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