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Statement of cash flows

The net changes in the balance sheet accounts of Eusey, Inc. for the year 2011 are shown below:

Account Debit Credit
Cash $265,600.00
Accounts Receivable $64,000.00
Allowance for Doubtful Accounts $14,000.00
Inventory $287,200.00
Prepaid Expenses $40,000.00
Long-Term Investments $144,000.00
Land $300,000.00
Buildings $600,000.00
Machinery $100,000.00
Office Equipment $28,000.00
Accumulated Depreciation:
Buildings $24,000.00
Machinery $20,000.00
Office Equipment $12,000.00
Accounts payable $233,200.00
Accrued Liabilities $72,000.00
Dividends Payable $128,000.00
Bonds Payable $940,000.00
Preferred stock ($50 par) $60,000.00
Common Stock ($10 par) $156,000.00
Additional Paid in Capital-Common $247,200.00
Retained Earnings $60,800.00
$1,898,000.00 $1,898,000.00

Additional Information:
1. Unaudited Income Statement data for Year Ended December 31, 2011
Income before extraordinary items $420,000.00
Extraordinary losses: Condemnation of land $132,000.00
Loss from Redemption of Preferred Stock $20,000.00 $(152,000.00)
Net Income $268,000.00

2. Cash dividends of $128,000 were declared December 15, 2011, payable January 15, 2012. A 5% stock dividend was issued March 31, 2011, when the market value was $22.00 per share.

3. The long-term investments were sold at a $4,000 loss.

4. A building and lond which cost $480,000 and had a book value of $300,000 were sold for $400,000. The cost of the land, in cluded in the cost and book value above, was $20,000.

5. The following entry was made to record an exchange of an old machine for a new one:
Machinery $160,000.00
Accumulated Depreciation-Machinery $40,000.00
Machinery $60,000.00
Bonds Payable $140,000.00

6. A fully depreiated copier machine which cost $28,000 was written off.

7. Preferred stock of $60,000 par value was redeemed for $80,000; the loss was charged against earnings.

8. The company issued 12,000 shares of its common stock on June 15, 2011 for $27 a share. A $2 per share broker underwriting fee was recognized as part of Professional Fees Expense in the operating section of the income statement. There were 87,600 shares outstanding on December 31, 2011.

9. Bonds were issued at 104 on December 31, 2011. The premium was credited to Interest Revenue.

10. Land that was condemned had a book value of $240,000.

Requirements:

1. Prepare a properly formatted and complete statement of cash flows using the indirect method. Ignore tax effects.

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Solution Summary

The solution explains how to prepare a statement of cash flows using indirect method

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