Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 13 Statement of Cash Flows 621

The following additional information was taken from the records:

a. Equipment and land were acquired for cash.

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

c. The investments were sold for $132,000 cash.

d. The common stock was issued for cash.

e. There was a $126,700 debit to Retained Earnings for cash dividends declared.

Instructions

Prepare a statement of cash flows, using the direct method of presenting cash flows from oper-

ating activities.

The comparative balance sheet of True-Tread Flooring Co. for June 30, 2007 and 2006, is as follows:

June 30, 2007 June 30, 2006

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)

Total $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

Total $567,400 $457,300

The income statement for the year ended June 30, 2007, is as follows:

Sales $945,200

Cost of merchandise sold 665,900

Gross profit $279,300

Operating expenses:

Depreciation expense $ 7,700

Other operating expenses 193,400

Total operating expenses 201,100

Operating income $ 78,200

Other expenses:

Loss on sale of investments 4,000

Income before income tax $ 74,200

Income tax expense 28,100

Net income $ 46,100

The following additional information was taken from the records:

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 $48,000 debit to Retained Earnings for cash dividends declared.

Alternate Problem
13-5B

Statement of cash flows—
direct method applied to
Alternate Problem 13-1B

Goal 3

Net cash flow from
operating activities, $45,900