Prepare a statement of cash flows for Chelsea Company
Chelsea Company
Comparative Balance Sheet
Dec. 31, 2010 Dec. 31, 2009
Assets
Cash... $51,000 $17,000
Accounts receivable... 6,000 8,000
Inventory... 10,000 7,000
Prepaid expenses... 2,000 3,000
Building... 30,000 15,000
Accumulated depreciation—building... (3,000) (2,000)
Total assets... $96,000 $48,000
Liabilities and Stockholders' Equity
Accounts payable... $ 3,000 $ 5,000
Long-term note payable... 12,000 13,000
Common stock... 38,000 18,000
Retained earnings... 43,000 12,000
Total liabilities and stockholders' equity... $96,000 $48,000
The income statement for the year is as follows:
Chelsea Company
Income Statement
For the Year Ended December 31, 2010
Sales (all on credit)... $410,000
Expenses and losses
Cost of goods sold... $252,000
Operating expenses, exclusive of depreciation... 94,300
Depreciation expense... 1,000
Interest expense... 1,200
Loss on sale of land... 2,500
Income taxes... 9,000
Total expenses and loss... 360,000
Net income... $ 50,000
Cash dividends of $19,000 were paid during the year. Land costing $20,000 was acquired by the issuance of common stock. The property was subsequently sold for $17,500 cash. (HINT: The acquisition of the land should be disclosed in a footnote only. The loss on the sale of the land will be added back under the Operating section of the cash flow. The proceeds received will be recorded under Investing.)
Instructions
Prepare a statement of cash flows for the year ended December 31, 2010 using the indirect method.
