Answered: comparative balance sheets for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The comparative balance sheets for Strackman Lux Company as of December 31 are presented below. STRACKMAN LUX COMPANY Comparative Balance Sheets December 31 Assets 2012 2011 Cash $ 71,000 $ 45,000 Accounts receivable 44,000 62,000 Inventory 151,450 142,000 Prepaid expenses 15,280 21,000 Land 105,000 130,000 Equipment 228,000 155,000 Accumulated depreciation—equipment (45,000) (35,000) Buildings 200,000 200,000 Accumulated depreciation—buildings (60,000) (40,000) Total $709,730 $680,000 Liabilities and Stockholders’ Equity Accounts payable $ 47,730 $ 40,000 Bonds payable 260,000 300,000 Common stock, $1 par 200,000 160,000 Retained earnings 202,000 180,000 Total $709,730 $680,000 Additional information: 1. Operating expenses include depreciation expense of $42,000 and charges from prepaid expenses of $5,720. 2. Land was sold for cash at book value.3. Cash dividends of $15,000 were paid. 4. Net income for 2012 was $37,000. 5. Equipment was purchased for $95,000 cash. In addition, equipment costing $22,000 with a book value of $10,000 was sold for $6,000 cash. 6. Bonds were converted at face value by issuing 40,000 shares of $1 par value common stock. Instructions Prepare a statement of cash fl ows for the year ended December 31, 2012, using the indirect method.

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