Comprehensive Statement of Cash Flows
The following schedule shows the account balances of Beneficio Corporation at the beginning and end of the fiscal year ended October 31, 2008.
|
Debits |
October 31, 2008 |
October 31, 2007 |
|
Cash and Cash Equivalents |
$ 222,000 |
$ 50,000 |
|
Investment Securities—Trading |
10,000 |
40,000 |
|
Accounts Receivable |
148,000 |
100,000 |
|
Inventories |
291,000 |
300,000 |
|
Prepaid Insurance |
2,500 |
2,000 |
|
Land and Building |
195,000 |
195,000 |
|
Equipment |
305,000 |
170,000 |
|
Discount on Bonds Payable |
8,500 |
9,000 |
|
Treasury Stock (at cost) |
5,000 |
10,000 |
|
Cost of Goods Sold |
539,000 |
|
|
Selling and General Expenses |
287,000 |
|
|
Income Taxes |
35,000 |
|
|
Unrealized Loss on Trading Securities |
4,000 |
|
|
Loss on Sale of Equipment |
1,000 |
|
|
Total debits |
$2,053,000 |
$876,000 |
|
Credits |
October 31, 2008 |
October 31, 2007 |
|
Allowance for Bad Debts |
$ 8,000 |
$ 5,000 |
|
Accumulated Depreciation—Building |
26,250 |
22,500 |
|
Accumulated Depreciation—Equipment |
39,750 |
27,500 |
|
Accounts Payable |
55,000 |
60,000 |
|
Notes Payable—Current |
70,000 |
20,000 |
|
Miscellaneous Expenses Payable |
18,000 |
8,700 |
|
Taxes Payable |
35,000 |
10,000 |
|
Unearned Revenue |
1,000 |
9,000 |
|
Notes Payable—Long Term |
40,000 |
60,000 |
|
Bonds Payable—Long Term |
250,000 |
250,000 |
|
Deferred Income Tax Liability |
47,000 |
53,300 |
|
Common Stock, $2 par |
359,400 |
200,000 |
|
Retained Earnings Appropriated for |
|
|
|
Possible Building Expansion |
43,000 |
33,000 |
|
Unappropriated Retained Earnings |
34,600 |
112,000 |
|
Paid In Capital in Excess of Par Value |
116,000 |
5,000 |
|
Sales |
898,000 |
|
|
Gain on Sale of Investment Securities |
12,000 |
|
|
Total credits |
$2,053,000 |
$876,000 |
The following information was also available:
(a) All purchases and sales were on account.
(b) Equipment with an original cost of $15,000 was sold for $7,000.
(c) Selling and general expenses include the following:
|
Building depreciation |
$ 3,750 |
|
Equipment depreciation |
25,250 |
|
Bad debt expense |
4,000 |
|
Interest expense |
18,000 |
(d) A 6 month note payable for $50,000 was issued toward the purchase of new equipment.
(e) The long term note payable requires the payment of $20,000 per year plus interest until paid.
(f) Treasury stock was sold for $1,000 more than its cost.
(g) During the year, a 30% stock dividend was declared and issued. At the time, there were 100,000 shares of $2 par common stock outstanding. However, 1,000 of these shares were held as treasury stock at the time and were prohibited from participating in the stock dividend. Market price was $10 per share after the stock dividend was issued.
(h) Equipment was overhauled, extending its useful life at a cost of $6,000. The cost was debited to Accumulated Depreciation—Equipment.
Instructions: Prepare a statement of cash flows for the year ended October 31, 2008, using the indirect method of reporting cash flows from operations.