Question : 156. On the basis of the following data for Grant Co. : 1239361

 

156. On the basis of the following data for Grant Co. for 2011 and the preceding year ended December 31, 2010, prepare a statement of cash flows.  Use the indirect method of reporting cash flows from operating activities.  Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $56,000 and cash dividends declared of $18,000. 

 

Year

Year

 

   2011 

   2010 

Cash

$90,000 

$  78,000 

Accounts receivable (net)

78,000 

85,000 

Inventories

106,500 

90,000 

Equipment

410,000 

370,000 

Accumulated depreciation

(150,000)

(158,000)

 

$534,500 

$465,000 

 

 

 

Accounts payable (merchandise creditors)

$  53,500 

$  55,000 

Cash dividends payable

5,000 

4,000 

Common stock, $10 par

200,000 

170,000 

Paid-in capital in excess of par–

 

 

  common stock

62,000 

60,000 

Retained earnings

  214,000 

  176,000 

 

$534,500 

$465,000 

 

 

 

 

 

 

 

 

 

157. Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: 

 

End

Beginning

Cash

$  62,000

$73,000

Accounts receivable (net)

75,000

60,000

Inventories

54,000

47,000

Accounts payable

 

 

  (merchandise creditors)

43,000

37,000

Salaries payable

2,800

3,800

Sales (on account)

210,000

 

Cost of merchandise sold

70,000

 

Operating expenses other than depreciation

67,000

 

 

 

 

Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows. 

 

 

 

 

 

158. The comparative balance sheet of Colson Company, for 2011 and the preceding year ended December 31, 2010 appears below in condensed form: 

 

Year

Year

 

2011

2010

 

 

 

Cash

$  45,000 

$  53,500 

Accounts receivable (net)

51,300 

58,000 

Inventories

147,200 

135,000 

Investments

60,000 

Equipment

493,000 

375,000 

Accumulated depreciation-equipment

(113,700)

(128,000)

 

$622,800 

$553,500 

Accounts payable

$  61,500 

$  42,600 

Bonds payable, due 2014

100,000 

Common stock, $10 par

250,000 

200,000 

Paid-in capital in excess of par–

 

 

  common stock

75,000 

50,000 

Retained earnings

  236,300 

  160,900 

 

$622,800 

$553,500 

 

 

 

The income statement for the current year is as follows: 

Sales

 

$623,000 

Cost of merchandise sold

 

  348,500 

Gross profit

 

$274,500 

Operating expenses:

 

 

  Depreciation expense

$24,700

 

  Other operating expenses

  75,300

  100,000 

Income from operations

 

$174,500 

Other income:

 

 

  Gain on sale of investment

$  5,000

 

Other expense:

 

 

  Interest expense

  12,000

     (7,000)

Income before income tax

 

$167,500 

Income tax

 

    64,100 

Net income

 

$103,400 

 

 

 

Additional data for the current year are as follows: 

(a)

Fully depreciated equipment costing $39,000 was scrapped, no salvage, and equipment was purchased for $157,000.

(b)

Bonds payable for $100,000 were retired by payment at their face amount.

(c)

5,000 shares of common stock were issued at $15 for cash.

(d)

Cash dividends declared were paid $28,000.

(e)

All sales are on account.

 

 

Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities. 

 

 

 

 

 

 

 

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