Reference no: EM131782841
Problem - Statement of cash flows-indirect method
The comparative balance sheet of Portable Luggage Company at December 31, 2008 and 2007, is as follows:
Dec. 31, 2008 Dec. 31, 2007
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 175,900 $ 143,200
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . .264,100 235,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352,300 405,800
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500 10,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120,000 120,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .680,000 450,000
Accumulated depreciation-buildings . . . . . . . . . . . . . . . . . . (185,000) (164,500)
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . 310,000 310,000
Accumulated depreciation-machinery & equipment . . . . . . (85,000) (76,000)
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500 48,000
$1,687,300 $1,481,500
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) . . . . . . . . . . . . .$ 332,300 $ 367,900
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13,000 10,000
Salaries payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30,200 34,600
Mortgage note payable, due 2015 . . . . . . . . . . . . . . . . . . .90,000 -
Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 154,000
Common stock, $1 par . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000 20,000
Paid-in capital in excess of par-common stock . . . . . . . . . . 200,000 50,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 997,800 845,000
$1,687,300 $1,481,500
An examination of the income statement and the accounting records revealed the following additional information applicable to 2008:
a. Net income, $204,800.
b. Depreciation expense reported on the income statement: buildings, $20,500; machinery and equipment, $9,000.
c. Patent amortization reported on the income statement, $5,500.
d. A building was constructed for $230,000.
e. A mortgage note for $90,000 was issued for cash.
f. 4,000 shares of common stock were issued at $38.50 in exchange for the bonds payable.
g. Cash dividends declared, $52,000.
Instructions - Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.