Intermediate Accounting: P5-6 Lansbury Inc. had the following balance sheet
Intermediate Accounting P5-6 Preparation of a Statement of Cash Flows and a Balance Sheet Lansbury Inc. had the following balance sheet at December 31, 2013. LANSBURY INC. BALANCE SHEET December 31, 2013 Cash 20,000 Accounts payable 30,000 Accounts receivable 21,200 Notes payable (long-term) 41,000 Investments 32,000 Common stock 100,000 Plant assets (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200 $194,200 During 2014 the following occurred: 1. Lansbury Inc. sold part of its investment portfolio for $15,000 This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available-for - sale. 2. A tract of land was purchased for $18,000 cash. 3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash. 4. An additional $20,000 in common stock was issued at par. 5. Dividends totalling $8,200 were declared and paid to stockholders. 6. Net income for 2014 was $32,000 after allowing for depreciation of $11,000 7. Land was purchased through the issuance of $30,000 in bonds. 8. At December 31, 2014, Cash was $32,000 Accounts Receivable was $41,600 and Accounts Payable remained at $30,000 Instructions (a) Prepare a statement of cash flows for 2014. (b) Prepare an unclassified balance sheet as it would appear at December 31, 2014. (c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.
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