Assignment

Accounting 2-Extra Credit problem

The comparative balance sheet of Bradley Co. for June 30, 2010 and 2009 is as follows:

June 30, 2010 June 30, 2009

Assets

Cash . . . . . . . . . . . . . . $ 41,600 $ 28,200 Accounts receivable (net) . 121,900 110,700 Inventories. . . . . .. . . 175,600 170,500 Investments. . . . . o 60,000 Land. . . . . . . . . .. . . 174,000 o Equipment. . . . . . . . 258,000 210,600 Accumulated depreciation . (58,300) (49,600)

$712,800 $530AOO

liabilities and Stockholders' Equity

Accounts payable (merchandise 'Creditors) .... $121,000 $114,200 Accrued expenses payable (operating expenses) 18,000 15,800 Dividends payable . 15,000 12,000 Common stock, $1 par. 67,200 60,000 Paid-in capital in excess of par-eommon stock. 264,000 120,000 Retained earnings ... 227,600 208AOO

$712,800 $530AOO

The income statement for the year ended June 30,2010, is as follows:

Sales . . . . . . . . . . . $1,134,900 Cost of merchandise sold. . 698AOO Gross profit. $ 436,500 Operating expenses:

Depreciation expense . $ 8,700 Other operating expenses . 289,800

Total operating expenses. 298,500

Operating income $ 138,000 Other expenses:

Loss on sale of Investments (6,000)

Income before income tax $ 132,000 Income tax expense 52,800

Net Income. $ 79,200

The following additional information was taken from the records:

a. Equipment and land were acquired for cash. b. There were no disposals of equipment during the year. c. The investments were sold for $54,000 cash. d. The common stock was issued for cash. e. There was a $60,000 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities and a reconciliation schedule of net income to cash provided from operations.