Q1) Net changes in balance sheet accounts of Lenon, Inc. for the year 2008 are given below:
| Account |
Debit |
Credit |
| Cash |
$125,600 |
|
| Accounts receivable |
|
$64,000 |
| Allowance for doubtful accounts |
|
14,000 |
| Inventory |
217,000 |
|
| Prepaid expenses |
20,000 |
|
| Long-term investments |
|
144,000 |
| Land |
300,000 |
|
| Buildings |
600,000 |
|
| Machinery |
100,000 |
|
| Office equipment |
|
28,000 |
| Accumulated depreciation: |
|
|
| Buildings |
|
24,000 |
| Machinery |
|
20,000 |
| Office equipment |
12,000 |
|
| Accounts payable |
183,200 |
|
| Accrued liabilities |
|
72,000 |
| Dividends payable |
|
128,000 |
| Premium on bonds |
|
32,000 |
| Bonds payable |
|
800,000 |
| Preferred stock ($50 par) |
60,000 |
|
| Common stock ($10 par) |
|
156,000 |
| Additional paid-in capital-common |
|
223,200 |
| Retained earnings |
87,200 |
|
| |
$1,705,200 |
$1,705,200 |
Additional information:
| 1. Income Statement Data for Year Ended December 31, 2008 |
| Income before extraordinary item |
$272,000 |
| Extraordinary loss: Condemnation of land |
132,000 |
| Net income |
$140,000 |
2. Cash dividends Of $128,000 were declared December 15, 2008, payable January 15, 2009. A 5% stock dividend was issued March 31, 2008, when market value was $22.00 per share.
3. Long-term investments were sold for $140,000.
4. Building and land that cost $480,000 and had book value of $300,000 were sold for $400,000. Cost of land, included in cost and book value above, was $20,000.
5. Following entry was made to record exchange of old machine for new one:
Machinery ............160,000
Cash .................. 40,000
Machinery ............ 60,000
Cash ............... 140,000
6. Fully depreciated copier machine that cost $28,000 was written off.
7. Preferred stock of $60,000 par value was redeemed for $80,000.
8. Company sold 12,000 shares of its common stock ($10 par) on June 15, 2008 for $25 a share. There were 87,600 shares outstanding on December 31, 2008.
9. Bonds were sold at 104 on December 31, 2008.
10. Land that was condemned hadbook value of $240,000.
problem:
Create statement of cash flows (indirect method). Ignore tax effects.