Ballard Co. reported $145,000 of net income for 2008. The accountant, in preparing the statement of cash flows, noted several items occurring during 2008 that might affect cash flows from operating activities.
1. Ballard purchased 100 shares of treasury stock at a cost of $20 per share. The company resold these shares at $25 per share.
2. Ballard sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $145 per share. This investment was shown on Ballard’s December 31, 2007, balance sheet as an available-for-sale security.
3. Ballard revised its estimate for bad debts. Before 2008, Ballard’s bad debt expense was 1% of its net sales. In 2008, this percentage was increased to 2%. Net sales for 2008 were $500,000, and net accounts receivable decreased by $12,000 during 2008.
4. Ballard issued 500 shares of its $10 par common stock for a patent. The market value of the shares on the date of the transation was $23 per share.
5. Depreciation expense is $39,000.
6. Ballard Co. holds 40% of the Nirvana Company’s common stock as a long-term investment. Nirvana Company reported $27,000 of net income for 2008.
7. Nirvana Company paid a total of $2,000 of cash dividends to all investees in 2008.
8. Ballard declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share.
Instructions
Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2008 net cash flow from operating activities.