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True-Tread Flooring Co. - Cash Flow Statement

The comparative balance sheet of True-Tread Flooring Co. for June 30, 2006 and 2005, is as follows:

__________________________________June 30, 2006_________June 30, 2005______

Assets

Cash $ 68,900 $ 53,700

Accounts receivable (net) $ 89,200 $ 85,400

Inventories $ 145,800 $ 132,700

Investments $ 0 $ 45,000

Land $ 105,500 $ 0

Equipment $ 210,800 $ 185,600

Accumulated depreciation $ (52,800) $ (45,100)

$ 567,400 $ 457,300

======= =======

Liabilities and Stockholders' Equity

Accounts payable (merchandise creditors) $ 104,300 $ 100,200

Accrued expenses (operating expenses) $ 15,200 $ 14,300

Dividends payable $ 12,000 $ 10,000

Common stock, $11 par $ 55,000 $ 50,000

Paid-in capital in excess of par

- common stock $ 200,000 $ 100,000

Retained earnings $ 180,900 $ 182,800

$ 567,400 $ 457,300

======= =======

The following additional information was taken from the records of True-Tread

Flooring Co:

a. Equipment and land were acquired for cash.

b. There were no disposals of equipment during the year.

c. The investments were sold for $41,000 cash.

d. The common stock was issued for cash.

e. There was a $46,100 credit to Retained Earnings for net income.

f. There was a $48,000 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Solution Summary

This solution is comprised of a detailed explanation to prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

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