Maurice Tutor
$15/per page/Negotiable
Comprehensive - The following are the balance sheets of Farrell Corporation as of December 31, 2007 and 2006, and the statement of income and retained earnings for the year ended December 31, 2007:
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Balance Sheets |
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|
31-Dec |
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|
2007 |
2006 |
Increase |
|
|
Assets |
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|
Cash |
$225,000 |
$180,000 |
$45,000 |
|
Accounts receivable, net |
295,000 |
305,000 |
-10,000 |
|
Inventories |
549,000 |
431,000 |
118,000 |
|
Investment in Hall, Inc., at equity |
73,000 |
60,000 |
13,000 |
|
Land |
350,000 |
200,000 |
150,000 |
|
Plant and equipment |
624,000 |
606,000 |
18,000 |
|
Less: Accumulated depreciation |
-139,000 |
-107,000 |
-32,000 |
|
Patent |
16,000 |
20,000 |
-4,000 |
|
Total assets |
$1,993,000 |
$1,695,000 |
$298,000 |
|
Liabilities and Stockholders’ Equity |
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|
Accounts payable and accrued expenses |
$604,000 |
$563,000 |
$41,000 |
|
Note payable, long-term |
150,000 |
— |
150,000 |
|
Bonds payable |
160,000 |
210,000 |
-50,000 |
|
Deferred taxes payable |
41,000 |
30,000 |
11,000 |
|
Common stock, $10 par |
410,000 |
400,000 |
10,000 |
|
Additional paid-in capital |
196,000 |
175,000 |
21,000 |
|
Retained earnings |
432,000 |
334,000 |
98,000 |
|
Treasury stock, at cost |
— |
-17,000 |
17,000 |
|
Total liabilities and stockholders’ equity |
$1,993,000 |
$1,695,000 |
$298,000 |
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|
Statement of Income and Retained Earnings |
|
|
Net sales |
$1,950,000 |
|
Operating expenses: |
|
|
Cost of sales |
1,150,000 |
|
Selling and administrative expenses |
505,000 |
|
Depreciation |
53,000 |
|
1,708,000 |
|
|
Operating income |
242,000 |
|
Other (income) expense: |
|
|
Interest expense |
15,000 |
|
Equity in net income of Hall, Inc. |
-13,000 |
|
Loss on sale of equipment |
5,000 |
|
Amortization of patent |
4,000 |
|
11,000 |
|
|
Income before income taxes |
231,000 |
|
Income taxes: |
|
|
Current |
79,000 |
|
Deferred |
11,000 |
|
Provision for income taxes |
90,000 |
|
Net income |
$141,000 |
|
Retained earnings, January 1, 2007 |
334,000 |
|
475,000 |
|
|
Cash dividends, paid August 13, 2007 |
43,000 |
|
Retained earnings, December 31, 2007 |
$432,000 |
Additional information:
1. On January 2, 2007 Farrell sold equipment costing $45,000, with a book value of $24,000, for $19,000 cash.
2. On April 2, 2007 Farrell issued 1,000 shares of common stock for $23,000 cash.
3. On May 14, 2007 Farrell sold all of its treasury stock for $25,000 cash.
4. On June 1, 2007 Farrell paid $50,000 to retire bonds with a face value (and book value) of $50,000.
5. On July 2, 2007 Farrell purchased equipment for $63,000 cash.
6. On December 31, 2007 land with a fair market value of $150,000 was purchased through the issuance of a long-term note in the amount of $150,000. The note bears interest at the rate of 15% and is due on December 31, 2012.
7. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting.
Required
1. Prepare a worksheet (spreadsheet) to support a statement of cash flows for the Farrell Corporation for the year ended December 31, 2007, based on the preceding information.
2. Prepare the statement of cash flows.