2005: Preparing a Statement of Cash Flows
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Balance Sheet Dec 31, 2004
Cash 50,000
A/R 27,000
Inventory 80,000
LT Invest 10,000
Land 32,000
Plant/equ 91,000
Total Assets 290,000
A/P 17,000
Taxes/P 3,000
Bonds/P 100,000
Cap Stock 75,000
RE 95,000
Total Lia/Stock Equity 290,000
The following occurred during 2005.
1. 25,000 in cash and 35,000 note payable were exchanged for land valued at 60,000
2. Bonds payable (maturing in 2009) in the amount of 20,000 were retired by paying 18,000 cash.
3. Capital stock in the amount of 50,000 was issued at par value
4. The company sold surplus equipment for 18,000. The equipment had a book value of 14,000 at the time of the sale.
5. Net income was 31,000
6. Cash dividends of 2,500 were paid to the stockholders
7. 100 shares of stock (considered short-term investments) were purchased for 8,300
8. A new building was acquired through the issuance of 50,000 in bonds.
9. 8,000 of depreciation was recorded on the plant and equipment.
10. At Dec 31, 2005, cash was 87,200, accounts receivable has a balance of 30,000, inventory has increased to 82,000, and accounts payable had fallen to 12,000. Long term investments and taxes payable were unchanged from 2004.
Instructions:
1. Prepare a statement of cash flows using the indirect method.
2. Prepare the Dec 31, 2005 balance sheet
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Solution Summary
Using the indirect method, a balance sheet is prepared
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