Question : 151. On the basis of the following data for Larson Co. : 1239359

 

151. On the basis of the following data for Larson Co. for the year ending December 31, 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.  In addition to the balance sheet data, assume that:Equipment costing $125,000 was purchased for cash.  Equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000.The stock was issued for cash.The only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000. 

 

Year

Year

 

2011

2010

Cash

$100,000 

$  78,000 

Accounts receivable (net)

78,000 

85,000 

Inventories

101,500 

90,000 

Equipment

410,000 

370,000 

Accumulated depreciation

(150,000)

(158,000)

 

$539,500 

$465,000 

 

 

 

Accounts payable (merchandise creditors)

$  58,500 

$  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 

 

$539,500 

$465,000 

 

 

 

 

 

 

 

 

 

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

 

Year

Year

 

2011

2010

Cash

$  53,000 

$  50,000 

Accounts receivable (net)

37,000 

48,000 

Inventories

108,500 

100,000 

Investments

….. 

70,000 

Equipment

573,200 

450,000 

Accumulated depreciation-equipment

(142,000)

(176,000)

 

$629,700 

$542,000 

 

 

 

Accounts payable

$  62,500 

$  43,800 

Bonds payable, due 2011

….. 

100,000 

Common stock, $10 par

325,000 

285,000 

Paid-in capital in excess of par–

 

 

  common stock

80,000 

55,000 

Retained earnings

  162,200 

    58,200 

 

$629,700 

$542,000 

 

 

 

The income statement for the current year is as follows: 

Sales

 

$625,700 

Cost of merchandise sold

 

  340,000 

Gross profit

 

$285,700 

Operating expenses:

 

 

  Depreciation expense

$26,000

 

  Other operating expenses

  68,000

    94,000 

Income from operations

 

$191,700 

Other income:

 

 

  Gain on sale of investment

$  4,000

 

Other expense:

 

 

  Interest expense

    6,000

     (2,000)

Income before income tax

 

$189,700 

Income tax

 

    60,700 

Net income

 

$129,000 

 

 

 

Additional data for the current year are as follows: 

(a)

Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $183,200.

(b)

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

(c)

5,000 shares of common stock were issued at $13 for cash.

(d)

Cash dividends declared and paid, $25,000.

 

 

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