Question
The net changes in the balance sheet accounts of ISTP, Inc. for the year 2020 are shown below: Account Debit Credit Cash $125,600 Accounts receivable
The net changes in the balance sheet accounts of ISTP, Inc. for the year 2020 are shown below:
Account Debit Credit
Cash $125,600
Accounts receivable $ 64,000
Allowance for doubtful accounts 14,000
Inventory 217,200
Prepaid expenses 20,000
Long-term investments 144,000
Land 300,000
Buildings 600,000
Machinery 100,000
Office equipment 28,000
Accumulated depreciation:
Buildings 24,000
Machinery 20,000
Office equipment 12,000
Accounts payable 183,200
Accrued liabilities 72,000
Dividends payable 128,000
Premium on bonds 32,000
Bonds payable 800,000
Preferred stock ($50 par) 60,000
Common stock ($10 par) 156,000
Additional paid-in capitalcommon 223,200
Retained earnings 87,200
$1,705,200 $1,705,200
Additional information:
1. Net income for the year was $140,000.
2. Cash dividends of $128,000 were declared December 15, 2020, payable January 15, 2021. A 5%
stock dividend was issued March 31, 2010, when the market value was $22 per share.
3. The long-term investments were sold for $140,000.
4. A building and land which cost $480,000 and had a book value of $300,000 were sold for
$400,000. The cost of the land, included in the cost and book value above, was $20,000.
5. The following entry was made to record an exchange of an old machine for a new one:
Machinery .................................................................... 160,000
Accumulated DepreciationMachinery ...................... 40,000
Machinery. 60,000
.Cash..140,000
6. A fully depreciated copier machine which cost $28,000 was written off.
7. Preferred stock of $60,000 par value was redeemed for $80,000.
8. The company sold 12,000 shares of its common stock ($10 par) on June 15, 2020 for $25 a share.
There were 87,600 shares outstanding on December 31, 2020.
9. Bonds were sold at 104 on December 31, 2020.
Instructions
Prepare a statement of cash flows (indirect). Ignore tax effects. EXPLAIN ENTRIES AND CALCULATIONS
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