VERNET COMPANY Comparative Balance Sheets December 31 Assets 2012 2011 Cash $ 41,000 $ 57,000 Accounts receivable 77,000 64,000 Inventory 172,000 140,000 Prepaid expenses 12,140 16,540 Land 110,000 150,000 Equipment 215,000 175,000 Accumulated depreciation—equipment (70,000) (42,000) Buildings 250,000 250,000 Accumulated depreciation—buildings (70,000) (50,000) Total $737,140 $760,540 Liabilities and Stockholders’ Equity Accounts payable $ 58,000 $ 45,000 Bonds payable 235,000 265,000 Common stock, $1 par 280,000 250,000 Retained earnings 164,140 200,540 Total $737,140 $760,540 Additional information: 1. Operating expenses include depreciation expense $55,000 and charges from prepaid expenses of $4,400. 2. Land was sold for cash at cost. 3. Cash dividends of $84,290 were paid. 4. Net income for 2012 was $47,890. 5. Equipment was purchased for $80,000 cash. In addition, equipment costing $40,000 with a book value of $33,000 was sold for $37,000 cash. 6. Bonds were converted at face value by issuing 30,000 shares of $1 par value common stock. Instructions Prepare a statement of cash fl ows for 2012 using the indirect method.
VERNET COMPANY Comparative Balance Sheets December 31 Assets 2012 2011 Cash $ 41,000 $ 57,000 Accounts receivable 77,000 64,000 Inventory 172,000 140,000 Prepaid expenses 12,140 16,540 Land 110,000 150,000 Equipment 215,000 175,000 Accumulated depreciation—equipment (70,000) (42,000) Buildings 250,000 250,000 Accumulated depreciation—buildings (70,000) (50,000) Total $737,140 $760,540 Liabilities and Stockholders’ Equity Accounts payable $ 58,000 $ 45,000 Bonds payable 235,000 265,000 Common stock, $1 par 280,000 250,000 Retained earnings 164,140 200,540 Total $737,140 $760,540 Additional information: 1. Operating expenses include depreciation expense $55,000 and charges from prepaid expenses of $4,400. 2. Land was sold for cash at cost. 3. Cash dividends of $84,290 were paid. 4. Net income for 2012 was $47,890. 5. Equipment was purchased for $80,000 cash. In addition, equipment costing $40,000 with a book value of $33,000 was sold for $37,000 cash. 6. Bonds were converted at face value by issuing 30,000 shares of $1 par value common stock. Instructions Prepare a statement of cash fl ows for 2012 using the indirect method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
VERNET COMPANY
Comparative Balance Sheets
December 31
Assets 2012 2011
Cash $ 41,000 $ 57,000
Accounts receivable 77,000 64,000
Inventory 172,000 140,000
Prepaid expenses 12,140 16,540
Land 110,000 150,000
Equipment 215,000 175,000
Accumulated depreciation —equipment (70,000) (42,000)
Buildings 250,000 250,000
Accumulated depreciation—buildings (70,000) (50,000)
Total $737,140 $760,540
Liabilities and Stockholders’ Equity
Accounts payable $ 58,000 $ 45,000
Bonds payable 235,000 265,000
Common stock, $1 par 280,000 250,000
Retained earnings 164,140 200,540
Total $737,140 $760,540
Additional information:
1. Operating expenses include depreciation expense $55,000 and charges from prepaid expenses
of $4,400.
2. Land was sold for cash at cost.
3. Cash dividends of $84,290 were paid.
4. Net income for 2012 was $47,890.
5. Equipment was purchased for $80,000 cash. In addition, equipment costing $40,000 with a
book value of $33,000 was sold for $37,000 cash.
6. Bonds were converted at face value by issuing 30,000 shares of $1 par value common stock.
Instructions
Prepare a statement of cash fl ows for 2012 using the indirect method.
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