FA10 Problem: Statement of Cash Flows - ARG Incorporated

FA10 Problem: Statement of Cash Flows - ARG Incorporated

Use the attached financial statements and the below additional information to prepare aStatement of Cash Flows using the direct method.Additional Information:On January 1, 20X7 the company sold its original land and building and purchased a new parcelof land, which also had a suitable building. The original land and building had a net book valueof $324,000 at the time of sale

173ARG IncorporatedBalance Sheetas at December 3120X8 20X7

Assets

CurrentCash $90,000$18,000Held for trading marketable securities (cost $30,000; 20X5 - $30,000) 48,60054,000Receivables 144,00072,000Inventory 90,000117,000372,600261,000Fixed assetsLand 180,000144,000Building 315,000270,000Equipment 216,000162,000Computer equipment under capital lease 45,000-756,000576,000Less: accumulated depreciation (90,000)(144,000)

666,000432,000

$1,038000$693,000

Liabilities and Shareholder’s Equity

CurrentAccounts payable $45,000$72,000Income taxes payable 32,40027,000Current portion of obligation under capital lease 7,200-84,60099,000Long termObligation under capital lease 28,800-Bonds payable (net of discount of $5,400; 20X7 - $9,000) 174,600171,000Future tax liability 81,00072,000284,400243,000Common stock 270,00090,000Retained earnings 399,600261,000954,000594,000$1,038000$693,000