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(d) Illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.

(d) Illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.

FINANCIAL ACCOUNTING
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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Aero Inc. had the following balance sheet at December 31, 2024. Aero Inc. Balance Sheet December 31, 2024 Cash $20,000 Accounts payable $30,000 Accounts receivable 21,200 Bonds payable 41,000 Investments 32,000 Common stock 100,000 Plant assets (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200 $194,200 1. 2. During 2025, the following occurred. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000. A tract of land was purchased for $38,000. 3. An additional $30,000 in common stock was issued at par. 4. Dividends totaling $10,000 were declared and paid to stockholders. 5. Net income for 2025 was $35,000, including $12,000 in depreciation expense. 6. Land was purchased through the issuance of $30,000 in additional bonds. 7. At December 31, 2025, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable was $40,000. (d) Illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.
Transcribed Image Text:Aero Inc. had the following balance sheet at December 31, 2024. Aero Inc. Balance Sheet December 31, 2024 Cash $20,000 Accounts payable $30,000 Accounts receivable 21,200 Bonds payable 41,000 Investments 32,000 Common stock 100,000 Plant assets (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200 $194,200 1. 2. During 2025, the following occurred. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000. A tract of land was purchased for $38,000. 3. An additional $30,000 in common stock was issued at par. 4. Dividends totaling $10,000 were declared and paid to stockholders. 5. Net income for 2025 was $35,000, including $12,000 in depreciation expense. 6. Land was purchased through the issuance of $30,000 in additional bonds. 7. At December 31, 2025, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable was $40,000. (d) Illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.
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