The comparative balance sheet of House Construction Co. for June 30, 2010 and 20
ID: 2442439 • Letter: T
Question
The comparative balance sheet of House Construction Co. for June 30, 2010 and 2009, is as follows:ASSETS JUNE 30,2010 30-Jun-09
CASH----- 41600 28200
A/R (NET) ----121900 110700
INVENTORIES---------- 175600 170500
INVESTMENTS---------- 0 60000
LAND -------174000 0
EQUIPTMENT---------- 258000 210600
ACCUMULATED DEPRECIATION--------- -58300 -49600
TOTAL------------ 712800 530400
LIABILITES & STOCKHOLDERS EQUITY
A/P (MERCHANDISE CREDITORS) ----------121000 114200
ACCRUED EXPENSE PAYABLE (OPERATING EXPENSE)------------ 18000 15800
DIVIDENDS PAYABLE--------------- 15000 12000
COMMON STOCK, $1 PAR--------------- 67200 60000
PAID-IN CAPITAL IN EXCESS OF PAR - COMMON STOCK------- 264000 120000
RETIANED EARNINGS ------------227600 208400
TOTAL---------- 712800 530400
The following additional information was taken from the records of House Construction Co.:
A. Equipment and land were acquired for cash.
B. There were no disposals of equipment during the year.
C. The investments were sold for $54,000 cash.
D. The common stock was issued for cash.
E. There was a $79,200 credit to Retained Earnings for net income.
F. There was a $60,000 debit to Retained Earnings for cash dividends declared.
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. If needed, use the minus sign to indicate cash outflows or a decrease in cash.
Explanation / Answer
House Construction Corporation
Statement of Cash flows - Indirect Method
Net Income
$79,200
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation
$8,700
Loss on Sale of Investments
$6,000
Increase in Inventory
($5,100)
Increase in Accounts receivable
($11,200)
Increase in Accounts Payable
$6,800
Increase in Accrued expenses
$2,200
Cash flows from Operating Activity
$86,600
House Construction Corporation
Statement of Cash flows - Indirect Method
Net Income
$79,200
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation
$8,700
Loss on Sale of Investments
$6,000
Increase in Inventory
($5,100)
Increase in Accounts receivable
($11,200)
Increase in Accounts Payable
$6,800
Increase in Accrued expenses
$2,200
Cash flows from Operating Activity
$86,600