Purchase Solution

# True-Tread Flooring Co. - Cash Flow Statement

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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

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

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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