BBB Company’s balance sheet and income statement follow:
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BBB Company |
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December 31, |
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2009 |
2008 |
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Assets |
$4,500 |
$4,000 |
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Cash |
2,500 |
2,000 |
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Marketable securities |
6,800 |
7,200 |
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Accounts receivable |
7,500 |
8,000 |
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Inventories |
21,300 |
21,200 |
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Total current assets |
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Land |
11,000 |
12,000 |
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Equipment |
24,000 |
20,500 |
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Accumulated depreciation—equipment |
3,800 |
3,000 |
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Building |
70,000 |
70,000 |
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Accumulated depreciation—building |
14,000 |
12,000 |
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Total assets |
$108,500 |
$108,700 |
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Liabilities and Stockholders’ Equity |
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Accounts payable |
$7,800 |
$7,000 |
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Wages payable |
1,050 |
1,000 |
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Taxes payable |
500 |
1,500 |
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Total current liabilities |
9,350 |
9,500 |
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Bonds payable |
30,000 |
30,000 |
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Common stock, $10 par |
32,000 |
30,000 |
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Additional paid in capital |
21,000 |
19,200 |
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Retained earnings |
16,150 |
20,000 |
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Total liabilities and stockholders’ equity |
$108,500 |
$108,700 |
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BBB COMPANY |
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Sales |
$38,000 |
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Operating expenses: |
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Depreciation expense |
$2,800 |
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Other operating expenses |
35,000 |
37,800 |
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Operating income |
200 |
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Gain on sale of land |
800 |
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Income before tax expense |
1,000 |
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Tax expense |
500 |
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Net income |
$500 |
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Supplemental information: |
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Dividends declared and paid |
$4,350 |
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Land sold for cash |
1,800 |
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Equipment purchased for cash |
3,500 |
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Common stock sold for cash |
3,800 |
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Required
a. Prepare a statement of cash flows for the year ended December 31, 2009. (Present the cash flows from operations using the indirect method.)
b. Comment on the statement of cash flows.