The following information is available for the Bott Company:

Additional information for the year:
(a)

(b) Last year depreciation expense was inadvertently understated in the amount of $1,800. The correction was made this year to Accumulated Depreciation and to Retained Earnings as a prior period adjustment. The company also received a related income tax refund of $500.
(c) Sixty shares of treasury stock (common) were reissued at $30 per share.
(d) Bonds payable with a face amount of $7,000 were issued for $7,750 on April 30, 2007. The bonds mature on April 30, 2012, and pay interest semiannually. The straight-line method is used to amortize the bond premium. Interest expense totaled $460 for 2007.
(e) Fifty shares of preferred stock (originally issued at $60 per share) were converted into 100 shares of common stock.
(f) Land costing $2,900 was sold for $3,800.
(g) Three hundred shares of common stock were sold for $33 per share.
(h) Equipment costing $32,000 was purchased during the year.
(i) Land was acquired at a cost of $9,000 during the year.
(j) Depreciation expense was $6,000.
(k) Patent amortization was $400.
(l) The company loaned money to one of its executives and received a $1,000 short-term note receivable on December 31,
2007. The note matures 90 days from the date of issuance.
Required
1. Prepare a worksheet (spreadsheet) to support a statement of cash flows for 2007.
2. Prepare the 2007 statement of cash flows for the Bott Company. Show the reconciliation of the net income to the net cash provided by operating activities in a separate schedule accompanying thestatement.

Transcribed Image Text:

Account Balances anuary 1, 2007 8 Accounts receivable (net) Marketable securities (at cost) Allowance for change in value 0 Investments (long-term) Buildings and equipment Discount on bonds payable Credits 516,000 $16,400 terin Convertible preferred stock, $100 par Unrealized increase in value of marketable securities Common stock, $10 par S116,000 Beginning retained eanings, unadjusted Less: $23,200 Prior period adjustment-correction of understatement of depreciation (net of income taxes) (1,300) $21,900 11,500 533,400 Adjusted beginning retained earmings Add: Net income Less: Cash dividends Ending retained eanings s(4,000) Stock dividends (150 shares at s31 per share) (4,650) (8,650) $24,750