The following is a list of the items to be included in the preparation of the 2007

Question:

The following is a list of the items to be included in the preparation of the 2007 statement of cash flows for the Trone Company:

1. Extraordinary gain (net), $9,200

2. Proceeds from issuance of note, $25,000

3. Decrease in accounts receivable, $5,000

4. Payment for purchase of patent, $19,800

5. Increase in inventory, $6,700

6. Payment of dividends, $30,000

7. Decrease in accounts payable, $4,000

8. Proceeds from sale of investments, $8,500

9. Amortization of premium on bonds payable, $2,100

10. Net income, $49,200

11. Common stock exchanged for land, $14,000

12. Payment for purchase of equipment, $39,400

13. Loss on sale of investments, $4,800

14. Decrease in deferred taxes payable, $3,600

15. Proceeds from issuance of preferred stock, $52,800

16. Payment to retire bonds, $37,800

17. Depreciation expense, $10,700

18. Ending cash balance, $22,100

Required

1. Prepare the statement of cash flows.

2. What would have happened if the company had not issued the note during 2007? How did the issuance of the note affect the company’s debt ratio at the end of 2007?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...