A comparative balance sheet and income statement for Groton Company follow: Grot
ID: 2467093 • Letter: A
Question
A comparative balance sheet and income statement for Groton Company follow:
Groton Company
Comparative Balance Sheet
December 31, 2011 and 2010
2011
2010
Assets
Cash
$
1
$
12
Accounts receivable
306
229
Inventory
158
196
Prepaid expenses
8
6
Total current assets
473
443
Property, plant, and equipment
509
430
Less accumulated depreciation
(85)
(71)
Net property, plant, and equipment
424
359
Long-term investments
25
32
Total assets
$
922
$
834
Liabilities and Stockholders' equity
Accounts payable
$
301
$
225
Accrued liabilities
70
80
Income taxes payable
72
63
Total current liabilities
443
368
Bonds payable
198
172
Total liabilities
641
540
Common stock
163
202
Retained earnings
118
92
Total stockholders’ equity
281
294
Total liabilities and stockholders' equity
$
922
$
834
Groton Company
Income Statement
For the Year Ended December 31, 2011
Sales
$
754
Cost of goods sold
448
Gross margin
306
Selling and administrative expenses
222
Net operating income
84
Non operating items:
Gain on sale of investments
$
6
Loss on sale of equipment
(2)
4
Income before taxes
88
Income taxes
23
Net income
$
65
During 2011, Groton sold some equipment for $19 that had cost $31 and on which there was accumulated depreciation of $10. In addition, the company sold long-term investments for $13 that had cost $7 when purchased several years ago. A cash dividend was paid during 2011 and the company repurchased $39 of its own stock. Groton did not retire any bonds during 2011.
Required:
1.
Using the indirect method, determine the net cash provided by (used in) operating activities for 2011. (Negative amount should be entered with a minus sign.)
2.
Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for 2011. (Amounts to be deducted and negative amounts should be indicated with a minus sign.)
A comparative balance sheet and income statement for Groton Company follow:
Explanation / Answer
Requirement 1
Requirement 2
Cash flow from operating activities Particulars Amount ($) Net Income 65 Add: Non Cash Expense Depreciation 14 Non Operating Gains/Loss Loss on sale of equipment 2 Gain on sale of Investment (6) Less: Increase in current assets Account Receivable (77) Prepaid Expense (2) Add: Decrease in current assets Inventory 38 Add: Increase in current liabilities Account Payable increase 76 Income tax payable 9 Less: decrease in current liabilities Accreud Liabilities -10 34 cash generated from operating activities 109Related Questions
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