1. Seneca Corporation has contracted you to prepare a statement of Cash Flows. The Controller has provided the following information.
2007
2006
Cash
43500
13000
Accounts Receivable
122250
10000
Inventory
12000
10000
Investments
3000
Buiding
29750
Equipment
35000
20000
Copyright
5000
5250
107750
91000
Allowance for Doubtful Debts
3000
4500
Accumulated Depreciation on Equipment
2000
4500
Accumulated Depreciation on Building
0
6000
Accounts Payable
5000
4000
Dividends Payable
0
5000
Notes Payable, short term( Non Trade )
3000
4000
Long Term Notes Payable
36000
25000
Common Stock
38000
33000
Retained Earnings
20750
5000
107750
91000
Additional Data related to 2007 are as follows:
1. Equipment that had cost $ 11,000 and was 40% depreciated at time of disposal was sold for $ 2500.
2. $ 5,000 of the Long Term Note Payable was paid by issuing Common Stock.
3. Cash Dividends paid were $ 5,000.
4. On Jan 1,2007 , the building was completely destroyed by flood. Insurance proceeds on the building were $ 33,000 ( net of $ 4,000 taxes).
5. Investments ( available – for –sale ) were sold at $ 2500 above their cost. The Company had made similar sales and investments in the past.
6. Cash of $ 10,000 was paid for the acquisition of equipment.
7. A long term Note of $ 16,000 was issued for the acquisition of equipment.
8. Interest of $ 2,000 and Income Taxes of 5,000 were paid in Cash.
Instructions:
Use the indirect method to analyze the above information and prepare a Statement of Cash Flows for Seneca. Flood damage is unusual and infrequent in that part of the country.