In Year 0007, the building that was previously rented was purchased for 150,000. The company paid $10,000 in cash and assumed a long-term mortgage for 140,000. Depreciation on the is building $7500 for year 0007. At the end of the year 0007, $7,100 of the mortgage payable was reclassified as a current liability payable in Year 0008.

New stock was issued for cash, 200. shares at $50.00 each.

The equipment account and its accumulated depreciation account is shown below:

Calculate the changes in working capital and prepare the company's statement of sources (inflows) and uses (outflows) for the year ended December 31, 0008

TER 10 STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS The own a net inc Calculate the changes in working capital and prepare the company's statement of sources (inflows) and uses (outflows) for the year ended December 31, 0008. bank. G P10.9 A motel has the following balance sheets at the end of each of its most recent two years of operation. CAS E 12-31-2007 12-31-2008 Given the follo 0008 and refe forma of cash Assets Cash Accounts receivable Inventory Land Building Accumulated depreciation, building Total Assets $ 8,800 17,200 2,100 20,000 50,600 ( 30,000) $68,700 $ -O- 30,600 5,500 20,000 100,600 ( 40,000 $116,700 Assets Current A Cash Liabilities & Stockholders' Equity Accounts payable Bank loan payable Long-term mortgage on building Common stock Retained earnings Total Liabilities & Stockholders' Equity $ 6,700 -0- -O- 2,000 60,000 $68,700 $ 12,800 7,900 30,000 2,000 64,000 $116,700 Credit car Accounts Food inve Beverage Prepaid e Total Property Less: A Nov The income statements provide the following information: STATE 158 CHAPTER 10 (10395 Sales revenue Operating costs Income before depreciation and interest and tax Depreciation, building Depreciation, furniture and equipment Income before interest and tax Interest Operating income (before tax) Income tax Net income $ 19.10 (1085 $ 685 Assets Current Assets Cash Statement of Retained Earnings For Year Ended December 31, 0007 Retained earnings, January 1, 0007 Add: Net income for year Subtotal Deduct: Dividends paid Retained earnings, December 31, 0007 $ 22.800 6,800 $ 29,600 Accounts receivab] Inventory, food 3,200 $ 26,400 Income Statement for Year Ended December 31, 0007 Balance December 31, Purchased new equipm Disposed of fully depri Depreciation expense Balance December 31 P10.7 Referring to the preceding P10.5 and P10.6 that presented a comparative balance sheet, income statement, and a statement of retained earnings, com- The equipment account, and its accumulated depreciation account, is plete a statement of cash flows in good form using the indirect method. P10.8 A catering company reported the following financial statements and in formation for two successive years: Additional financial information: 1. In Year 0007, the building that was previously rented was purchased for $150,000. The company paid $10,000 cash and assumed a long- term mortgage for $140,000. Depreciation on the building is $7,500 for Year 0007. At the end of Year 0007, $7,100 of the mortgage payable was reclassified as a current liability payable in Year 0008. 2. New stock was issued for cash, 200 shares at $50.00 each. Statement of Retained Earnings For the Year Ended December 31, 0007 Retained earnings December 31, 0007 Operating loss for Year 0008 8,100 Retained earnings December 31, 0008 shown below: Prepaid expenses Total Current Property, Plant a Building Accumulated de Equipment Accumulated de Net Property Total Assi Liabilities and Current Liabi Accounts pay Accrued expe Current porti Total Curi Long-term I Long-term Total Lia Stockholde $29,900 $21,800 Commons Retained e Total S Total Lia ANALYSIS PROBLEMS 107 $204,900 ( 173,800) 31,100 8,300) 3,700) Balance December 31, 0006 Purchased new equipment Disposed of fully depreciated old equipment Depreciation expense Year 0007 Balance December 31, 0007 Accumulated Equipment Depreciation $31,700 $5,800 6,300 (4,100) ( 4.100) 4,500 $33,900 $6,200 $ 19,100 ( 10.800) $ 8,300 1,500) S 6,800 Comparative Balance Sheet 12-31-0006 12-31-0007 $ 22,800 6,800 $ 29,600 3,200) Assets Current Assets Cash Accounts receivable Inventory, food Prepaid expenses Total Current Assets $ 8,600 19,800 6,100 1,200 $35,700 $ 15,000 15,800 6,300 1,700 $ 38,800 $ 26,400 comparative mnings, com- it method. Property, Plant and Equipment Building Accumulated depreciation, building Equipment Accumulated depreciation, equipment Net Property, Plant and Equipment Total Assets -O- -0- 31,700 5,800) $25,900 $61,600 150,000 ( 7,500) 33,900 6,200) $170,200 $209,000 ents and in- purchased ned a long- $21,200 7,500 -0- $28,700 $ 25,400 8,800 7,100 $ 41,300 gis $7,500 mortgage Year 0008 Liabilities and Stockholders' Equity Current Liabilities Accounts payable Accrued expenses Current portion of mortgage payable Total Current Liabilities Long-term Liabilities Long-term mortgage payable Total Liabilities Stockholders' Equity Common stock Retained earnings Total Stockholders' Equity -O- $28,700 $132.900 $174,200 $ 3,000 29,900 $32,900 $61,600 $ 13,000 21,800 $ 34,800 $209,000 0 0 Total Liabilities and Stockholders' Equity count, is