Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 13 Statement of Cash Flows 617

The following additional information was taken from the records:

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

b. Equipment and land were acquired for cash.

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

d. The common stock was issued for cash.

e. There was a $56,000 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 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.

Instructions

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

operating activities.

ALTERNATE ACCOUNTING APPLICATION PROBLEMS

Alternate Problem
13-1B

Statement of cash flows—
indirect method

Goal 2

Net cash flow from
operating activities, $45,900