Statement of cash flows (indirect method).
The net changes in the balance sheet accounts of Lenon, Inc. for the year 2008 are shown 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 the market value was $22.00 per share.
3. The long-term investments were sold for $140,000.
4. A building and land which cost $480,000 and had a book value of $300,000 were sold for $400,000. The cost of the land, included in the cost and book value above, was $20,000.
5. The following entry was made to record an exchange of an old machine for a new one:
Machinery ............160,000
Cash .................. 40,000
Machinery ............ 60,000
Cash ............... 140,000
6. A fully depreciated copier machine which cost $28,000 was written off.
7. Preferred stock of $60,000 par value was redeemed for $80,000.
8. The 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 had a book value of $240,000.
Instructions
Prepare a statement of cash flows (indirect method). Ignore tax effects.