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Q1) Make a statement of cash flows using indirect method for Windsor Corp for year 2008.

Increase

(Decrease)

 

                         Cash                                                                                       132,000

                        Marketable Securities                                                                        (121,000)

                        Account Receivable                                                                   83,200

                        Allowance for Doubtful Accounts                                              13,300

                        Inventory                                                                                    74,200

                        Prepaid Expense                                                                     (17,500)

                        Investment In SAS, Inc                                                          (20,000)

                        Plant and Equipment                                                              210,000

                        Accumulated Depreciation                                                     130,000

                        Deferred Tax Assets                                                                (80,000)

                        Account Payable                                                                     (80,700)

                        Accrued Liabilities                                                                  (74,000

                        8% Bond Liability                                                                    80,000

                        Common Stock and Additional Paid in Capital                       290,000

                        Retained Earnings                                                                   (98,000)

 

Analysis of Retained Earnings

Retained Earnings December 31, 2007                                              1,360,000

Add: Net Income                                                                                    327,000

Deduct: Cash Dividends                                                                         185,000

              Stock Dividends                                                                        240,000       

Retained Earnings- Unappropriate, December 31, 2008                   1,262,000       

Extra Information:

A)  On January 2 , 2008 marketable securities (available for -sale ) costing $121,000 were sold for $ 155,000

B) Company paid cash dividend on February 1, 2008.

C) Account receivable of $16,200 and 19,400 were considered uncollectible and written-off in 2008 and 2007, respectively.

D) Major repairs of $33,000 to equipment were debited to accrued depreciation during year. No assets were retired during 2008.

E) Windsor owns 20% of SAS, Inc. and accounts for their investment using equity method. SAS paid no dividends during year and had net loss of $100,000.

F) During year, employees exercise 2,000 stock options each having exercise price of $ 25 a share. DTA decrease reflects tax benefits Company realized upon exercise of options.

G)  At January 1, 2008, cash balance was $166,000. Interest and tax expense were $30,000 and $75,000, respectively.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916428

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