PROBLEM 7–8 While on assignment you discover that you have misplaced the balance sheet of Bird Corpora-

tion as of January 1, Year 1. However, you do have the following data on Bird Corporation:

BIRD CORPORATION Postclosing Trial Balance December 31, Year 1 Debit balances Cash ............................................... $ 100,000 Accounts receivable........................ 120,000 Inventory ........................................ 130,000 Property, plant, and equipment ...... 550,000 Other noncurrent investments ........ 200,000 Total ............................................... $1,100,000 Credit balances Accounts payable............................ $ 100,000 Current portion of long-term debt... 80,000 Accumulated depreciation .............. 270,000 Long-term debt............................... 200,000 Common stock ................................ 300,000 Retained earnings .......................... 150,000 Total................................................ $1,100,000 BIRD CORPORATION Statement of Cash Flows For Year Ended December 31, Year 1 Cash flows from operations Net income................................................................ $150,000 Add (deduct) adjustment to cash basis Depreciation......................................................... $ 85,000 Loss on sale of equipment.................................... 5,000 Gain on sale of noncurrent investments............... (50,000)
Increase in accounts receivable ........................... (30,000)
Increase in inventories ......................................... (20,000)
Increase in accounts payable............................... 40,000 30,000 Cash from operations........................................... 180,000 Cash flows from investing activities Additions to property and equipment........................ (150,000)
Sale of equipment..................................................... 10,000 Sale of investments .................................................. 95,000 Cash used for investing activities ............................ (45,000)
Cash flows from financing activities Issuance of common stock........................................ 10,000 Additions to long-term debt...................................... $15,000 Decrease in current portion of long-term debt........... (30,000) (15,000)
Cash dividends......................................................... (80,000)
Cash used for financing activities............................ (85,000)
Net increase in cash...................................................... $ 50,000 Required:
Using the available data and information, prepare the balance sheet of Bird Corporation as of January 1, Year 1. T-accounts can be helpful in reconstructing the individual accounts. (Note:
Equipment sold had accumulated depreciation of $50,000.)