ACCT122 – Spring 2014

Due March 8, 2014 Project #2

Preparation of a Statement of Cash Flows – Indirect Method

Using the provided information for National Brands Corporation, answer the following questions:

a. What is the book value of the equipment sold?

b. What is the book value of the building sold?

c. Prepare a statement of stockholders’ equity

d. Prepare a statement of cash flows using the indirect method.

Your answer may be submitted using Excel or Word; please make sure it is in the proper format.

Plant assets:

? Acquisitions for the year were $47,000 cash.

? Depreciation expense – $4,100

Common stock was issued for $88,000.

Equipment:

? Acquisitions for the year were $20,000 by executing a note payable.

? Sold equipment for $35,000 cash. Calculate the gain/loss (analyze the t-account).

? Depreciation expense – $4,000

Buildings:

? Sold a building for $31,700 cash. Calculate the gain/loss (analyze the t-account).

? Depreciation expense – $6,000

Treasury stock was sold for $45,000 cash.

Cash dividends of $15,000 were paid.

Net income/ (loss) for the year is calculated from the activity in Retained Earnings.

National Brands Corporation

Comparative Balance Sheet

December 31, 2013

December 31, 2013 December 31, 2012

Cash $180,200 $15,000

Accounts Receivable 15,000 28,600

Inventory 23,800 17,000

Prepaid expenses 3,000 5,700

Equipment 16,000 36,400

Plant assets 52,900 10,000

Building 84,000 114,500

$374,900 $227,200

Accounts payable (merchandise) $37,400 $16,000

Salary payable 5,500 4,000

Accrued liabilities 15,000 19,300

Income tax payable 3,800 3,000

Notes payable 117,000 97,000

Common stock 138,000 50,000

Treasury stock 0 (45,000)

Retained earnings 58,200 82,900

$374,900 $227,200…