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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.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M922508

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