Financial Accounting: An Integrated Statements Approach, 2nd Edition

618 Chapter 13 Statement of Cash Flows

The comparative balance sheet of Sky-Mate Luggage Company at December 31, 2007 and 2006,

is as follows:

Dec. 31, 2007 Dec. 31, 2006

Assets

Cash $ 184,200 $ 165,400

Accounts receivable (net) 252,100 224,300

Inventories 300,200 348,700

Prepaid expenses 9,500 8,000

Land 120,000 120,000

Buildings 600,000 425,000

Accumulated depreciation—buildings (215,000) (194,000)

Machinery and equipment 310,000 310,000

Accumulated depreciation—machinery & equipment (83,500) (75,000)

Patents 50,000 54,000

Total $1,527,500 $1,386,400

Liabilities and Stockholders’ Equity

Accounts payable (merchandise creditors) $ 284,300 $ 295,700

Dividends payable 15,000 10,000

Salaries payable 19,500 22,500

Mortgage note payable, due 2027 70,000 —

Bonds payable — 102,000

Common stock, $1 par 22,000 20,000

Paid-in capital in excess of par—common stock 150,000 50,000

Retained earnings 966,700 886,200

Total $1,527,500 $1,386,400

An examination of the income statement and the accounting records revealed the following

additional information applicable to 2007:

a. Net income, $140,500.

b. Depreciation expense reported on the income statement: buildings, $21,000; machinery

and equipment, $8,500.

c. Patent amortization reported on the income statement, $4,000.

d. A building was constructed for $175,000.

e. A mortgage note for $70,000 was issued for cash.

f. 2,000 shares of common stock were issued at $51 in exchange for the bonds payable.

g. Cash dividends declared, $60,000.

Instructions

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

operating activities.

The comparative balance sheet of Builders’ Supply Co. at December 31, 2007 and 2006, is as follows:

Dec. 31, 2007 Dec. 31, 2006

Assets

Cash $ 40,400 $ 45,200

Accounts receivable (net) 95,100 87,900

Inventories 140,700 122,800

Prepaid expenses 3,900 5,000

Land 75,000 100,000

Buildings 315,000 140,000

Accumulated depreciation—buildings (70,200) (58,300)

Equipment 225,600 210,400

Accumulated depreciation—equipment (81,400) (85,900)

Total $744,100 $567,100

Alternate Problem

13-2B

Statement of cash flows—

indirect method

Goal 2

Net cash flow from

operating activities, $178,800

Alternate Problem

13-3B

Statement of cash flows—

indirect method

Goal 2

Net cash flow from

operating activities, $71,400

(continued)