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Statement of cash flows

Quinn Development, Inc. constructs homes and offices and sells them to customers. The financial information shown below was gathered from its accounting records for 2009. Assume any increase or decrease in the balances from 1/1/09 to 12/31/09 resulted from either receiving or paying cash in the transaction. For example, during 2009 the balance on loans for land holdings increased $75,000 because the company received $75,000 in cash by taking out an additional loan on the land.

Balance as of Balance as of
Items 01/01/09 12/31/09

Cash $130,000 $175,000
Cash receipts from customers 0 750,000
Loans on land holdings 225,000 300,000
Cash distributions to owners 0 60,000
Loan on building 130,000 80,000
Investments in securities 600,000 845,000
Cash payments for other expenses 0 32,000
Cash payments for taxes 0 43,000
Cash payments for operating expenses 0 215,000
Cash payments for wages and salaries 0 135,000

1. Prepare a statement of cash flows for Quinn Development, Inc., for the year ended December 31, 2009.

2. Does Quinn Development, Inc., appear to be in good shape cash standpoint? What other information would help analyze situation?

Solution Preview

Please see the attached Excel spreadsheet.

Direct Method

Cash Flows from Operating Activities
Cash receipts from customers   $750,000
Cash payments for taxes   $(43,000)
Cash payments for other expenses $(32,000)
Cash payments for opeating expenses   $(215,000)
Cash payments for wages and ...