The comparative balance sheet of Pell Company, for 2009 and the preceding year e
ID: 2385799 • Letter: T
Question
The comparative balance sheet of Pell Company, for 2009 and the preceding year ended December 31, 2008, appears below in condensed form:2009 /2008
Cash $53,000 / $50,000
Accounts receivable (net) 37,000 /48,000
Inventories 108,500 / 100,000
Investment none /70,000
Equipment 573,200 / 450,000
Accumulated Depreciation . equipment -142,000 / -176,000
Total $629,700 /$542,000
-----------------------------------------------------------------------------------------------
Accounts payable $62,500 / $43,800
Bonds payable, due 2012 none/ 100,000
Common stock 325,000 / 285,000
Paid-in capital in excess of par . common stock 80,000 /55,000
Retained earnings 162,200 / 58,200
total $629,700 / $542,000
--------------------------------------------------------------------------------------------------
Sales ------------------------ $651,000
Cost of merchandise sold 340,000
-------------
Gross profit / $311,000
Operating expenses:
Depreciation expense / $26,000
Other operating expenses 68,000 / 94,000
Income from operations $217,000
Other income:
Gain on sale of investment $4,000
Other expense
Interest expense 6,000 / (2,000)
Income before income tax / $215,000
Income tax / 86,000
Net income $129,000
Additional data for the current year:
a. Original cost of fully depreciated equipment, scrapped, no salvage value $60,000
b. Equipment was purchased for cash 183,200
c. Bonds payable were retired by payment at their face amount 100,000
d. 5,000 shares of common stock were issued for cash
e. Cash dividends declared and paid - 25,000
*prepare a statement of cash flows. Use the direct method of reporting cash
flows from operating activities; include the reconciliation of cash flows from operating activities.
Explanation / Answer
Statement of cash flows Amount
Operating Activities
Income from operations $ 217,000
Interest expense -6000
Income tax -86000
Debtors received 11000
Inventories -8500
127,500
Financing Activities
Dividends paid -25000
Bonds paid -100000
Common stock isued 5000
-120000
Investing Activities
Investments sold 74000
Equipment purchased -183200
Equipment sold 60000
-49200
Total casf flow -41,700