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    Fill-in Missing Amounts - Financial Statements

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    The chief accountant for Grandview corporation provides you with the company's 2011 statement of cash flows and income statement. The accountant has asked for your help with some missing figures in the company's comparative balance sheets. These financial statements are shown next ($ in millions).
    Grandview Corporation
    Statement of cash flows
    For the Year Ended December 31, 2011
    Cash flows from operating activities
    Collections from customers $71
    Payment to suppliers (30)
    Payment of general & administrative expenses (18)
    Payment of income taxes (9)
    ___
    Net cash flows from operating activities 14
    Cash flow
    Sale of investments 65

    Cash flows from financing activities
    Issuance of common stock 10
    Payment of dividends 3
    _
    Net cash flows from financing activities 7

    Net increase in cash 86

    Grandview Corporation
    Statement of cash flows
    For the Year Ended December 31, 2011

    Sales revenue $80
    Cost of good sold 32
    __
    Gross profit 48
    Operating expenses:
    General and administrative $18
    Depreciation 10
    ___
    Total operating 28
    Operating income 20
    Other income:
    Gain on sale of investments 15
    Income before income taxes 35
    Income tax expense 7
    Net income $28

    Grandview Corporation
    Balance sheets
    At December 31
    2011 2010
    ________________________________________________________________________
    Assets:
    Cash $145 ?
    Accounts receivable ? 84
    Investments ___ 50
    Inventory 60 ?
    Property, plant & equipment 150 150
    Less: accumulated depreciation (65) ?
    Total assets ? ?

    Liabilities and shareholders' equity:
    Accounts payable to suppliers $40 $30
    Payables for selling & admin. Expenses 9 9
    Income taxes payable 22 ?
    Common stock 240 230
    Retained earnings ? ?

    Total liabilities and shareholders' equity ? ?

    Required

    1. Calculate the missing amounts.
    2. Prepare the operating activities section of Grandview's 2011 statement of cash flows using the indirect method.

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    Solution Summary

    To demonstrate the relationship between the financial statements, this solution illustrates how to use two of the basic financial statements to derive balances for the third.

    $2.19