Comprehensive – Angel Company has prepared its financial statements for the year ended December 31, 2007 and for the three months ended March 31, 2008. You have been asked to prepare a statement of cash flows for the three months ended March 31, 2008. The company’s balance sheet data at December 31, 2007 and March 31, 2008, and its income statement data for the three months ended March 31, 2008, follow. You have previously satisfied yourself as to the correctness of the amounts presented.
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prepare a worksheet spreadsheet to support the statement of cash flows for angel com 610553
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31-Dec-07 |
31-Mar-08 |
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Cash |
$25,300 |
$79,400 |
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Marketable investments (at cost) |
17,500 |
8,300 |
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Allowance for decrease in value |
1,000 |
900 |
|
Accounts receivable |
24,320 |
49,320 |
|
Inventory |
31,090 |
48,590 |
|
Total current assets |
$97,210 |
$184,710 |
|
Land |
40,000 |
18,700 |
|
Building |
250,000 |
250,000 |
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Equipment |
— |
81,500 |
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Accumulated depreciation |
15,000 |
16,250 |
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Investment in 30% owned company |
61,220 |
67,100 |
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Other assets |
15,100 |
15,100 |
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Total |
$448,530 |
$600,860 |
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Accounts payable |
$21,220 |
$38,417 |
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Income taxes payable |
— |
13,529 |
|
Total current liabilities |
$21,220 |
$51,946 |
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Other liabilities |
187,000 |
187,000 |
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Bonds payable |
50,000 |
115,000 |
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Discount on bonds payable |
2,300 |
2,150 |
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Deferred taxes payable |
510 |
846 |
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Preferred stock |
30,000 |
— |
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Common stock |
80,000 |
110,000 |
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Unrealized decrease in value of marketable investments |
1,000 |
900 |
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Dividends declared |
— |
8,000 |
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Retained earnings |
83,100 |
147,118 |
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Total |
$448,530 |
$600,860 |
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Income Statement Data For the Three Months Ended March 31, 2008 |
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Sales |
$242,807 |
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Gain on sale of marketable investments |
2,400 |
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Equity in earnings of 30% owned company |
5,880 |
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Extraordinary gain on condemnation of land (net of tax) |
8,560 |
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Total revenues |
$259,647 |
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Cost of sales |
$157,354 |
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General and administrative expenses |
22,010 |
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Depreciation |
1,250 |
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Interest expense |
1,150 |
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Income taxes |
13,865 |
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Total expenses |
$195,629 |
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Net income |
$64,018 |
Your discussion with the company’s controller and a review of the financial records have revealed the following information:
(a) On January 7, 2008 the company sold marketable securities for cash. These securities had cost $9,200, and had a fair value of $8,600 at December 31, 2007. The remaining marketable securities were adjusted to their $7,400 fair value on March 31, 2008 by adjustment of the related allowance account. The dividend and interest revenue on these marketable securities is not material.
(b) The company’s preferred stock was converted into common stock at a rate of one share of preferred for two shares of common. The preferred stock and common stock have par values of $2 and $1, respectively.
(c) On January 16, 2008, three acres of land were condemned. An award of $32,000 in cash was received on March 24, 2008. Purchase of additional land as a replacement is not contemplated by the company.
(d) On March 25, 2008 the company purchased equipment for cash.
(e) On March 26, 2008 bonds payable were issued by the company at par for cash.
(f) The investment in 30% owned company included an amount of $9,600 attributable to an increase in the recorded value of depreciable assets at December 31, 2007. This increase is being depreciated at a quarterly rate of $480.
Required
1. Prepare a worksheet (spreadsheet) to support the statement of cash flows for Angel Company for the three months ended March 31, 2008.
2. Prepare the statement of cash flows.
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