Question :
139. (CMA adapted, Jun 94 #4) Spring Corporation, a public company, : 1245799
139. (CMA adapted, Jun 94 #4) Spring Corporation, a public company, has prepared all of its year-end financial statements with the exception of the statement of cash flows. Presented below is condensed financial information for the years ended May 31, Year 3 and Year 4, as well as supplemental data on certain transactions that occurred during the year ended May 31, Year 4.
Spring CorporationStatement of Financial Positionat May 31, Year 3 and Year 4
Cash
$ 4,300
$ 5,100
Accounts receivable
3,700
4,200
Inventories
34,200
31,700
Prepaid expenses
1,800
2,100
Land
38,000
27,000
Buildings (net)
126,800
117,700
Equipment (net)
50,500
66,800
Leased equipment
Total assets
Accounts payable
$ 5,900
$ 3,400
Income taxes payable
2,600
2,100
Obligation under capital lease
–
7,700
Bonds payable
50,000
60,000
Deferred income taxes
2,200
2,400
Common stock, $10 par
125,000
135,000
Paid-in capital in excess of par
12,000
14,000
Retained earnings
Total liabilities and shareholders’ equity
Spring CorporationIncome StatementFor the Year Ended May 31, Year 4
Sales
$127,900
Cost of goods sold
$69,800
Selling expense
21,000
Administrative expense
20,000
Deprec. expense-buildings
700
Deprec. expense-equipment
1,200
Bond interest expense
Income before gain & tax
$ 11,200
Gain on sale of land
3,500
Less: Income tax expense
Income from operations
$ 13,900
Extraordinary loss (net of tax)
Net income
Spring CorporationRetained Earnings Statementat May 31, Year 4
Beginning retained earnings
$61,600
Net income
11,300
Stock dividends
(12,000)
Cash dividends
)
Ending retained earnings
Supplemental InformationFor Fiscal Year Ended May 31, Year 4
(a)
Land costing $11,000 was sold for $14.500, resulting in a $3,500 gain.
(b)
During the year, a fire completely destroyed a building with an original cost of $24,000 and a net book value of $8,400. The insurance settlement resulted in after-tax cash proceeds of $5,800 and an extraordinary loss (net of income taxes) of $2,600.
(c)
Equipment was purchased for cash at a cost $17,500.
(d)
On May 31, Year 4, the company leased equipment under a long-term capital lease, recording the lease at $7,700.
(e)
At the end of the year, bonds payable with a face value of $10,000 were issued at par.
(f)
A stock dividend was declared and issued during the year. The dividend involved 1,000 shares of $10 par common stock; the market value of the stock on the date of issuance was $12 per share.
(g)
Taxable Income was less than pretax accounting income for the year, resulting in an increase in deferred income taxes payable of $200.
Required:Using the indirect method, prepare the Statement of Cash Flows for Spring Corporation for the year ended May 31, Year 4. The statement should comply with the requirements of Statements of Financial Accounting Standards No. 95, ‘Statement of Cash Flows,’ and be supported by appropriate calculations.
