The following data are derived from the 2004 financial statements of Southwest Airlines. All dollars are in millions. Southwest has a December 31 year-end.

Cash balance, January 1, 2004 $1,865 Cash paid for repayment of debt 207 Cash received from issuance of common stock 88 Cash received from issuance of long-term debt 512 Cash received from customers 6,455 Cash paid for property and equipment 1,850 Cash paid for dividends 14 Cash paid for repurchase of common stock 246 Cash paid for goods and services 5,298 Instructions

(a) After analyzing the data, prepare a statement of cash flows for Southwest Airlines for the year ended December 31, 2004.

(b) Discuss whether the company’s cash from operations was sufficient to finance its investing activities. If it was not, how did the company finance its investing activities?

E1-13 John Paul is the bookkeeper for Gabelli Company. John has been trying to get the balance sheet of Gabelli Company to balance. It finally balanced, but now he’s not sure it is correct.

GABELLI COMPANY Balance Sheet December 31, 2007 Assets Liabilities and Stockholders’ Equity Cash $18,500 Accounts payable $16,000 Supplies 9,500 Accounts receivable (12,000)

Equipment 40,000 Common stock 40,000 Dividends 10,000 Retained earnings 34,000 Total assets $78,000 Total liabilities and stockholders’ equity $78,000 Instructions Prepare a correct balance sheet.