Question

QUESTION #3 Statement of Cash Flow REMEMBER THE PROPER FORMAT OF THIS STATEMENT IS TO BALANCE CASH AND CASH EQUIVALENTS. Lanni Ltd.'s comparative balance sheet information at December 31, 2011 and 2010, and its income stan year ended December 31, 2011, are as follows: Lanni Ltd. Comparative Balance Sheet Information December 31 Net 2011 2010 Change Cash... $ 35,000 5 18,200 $ 16,800 Cash equivalents .................. 12,600 7,000 5,600 Accounts receivable....... 64,400 27,300 37,100 Inventory .......................... 83,300 60,900 22,400 Long-term investment.......... -0. 12,600 (12,600) Land 56,000 56,000 -- Building and equipment....... 324,100 332,500 (8,400) Accumulated depreciation.... 86,100 70,700 (15,400) Accounts payable............... 14,900 27,000 (12,100) Dividends payable.............. 500 1,000 (500) Bonds payable................... 17,500 -0 17,500 Preferred shares................ 59,500 59,500 -0- Common shares............. 296,100 296,100 Retained earnings........... 100,800 60,200 40,600 Other information: Net Income for the year was $75,600. During 2011, the following transactions occurred: 1. Issued $17,500 of bonds payable at face value. 2. Sold the long-term investment on January 1, 2011, for $21,000. 3. Sold equipment for $4.900 cash that had originally cost $22,400 and had $14,700 of accumulated depreciation. 4. Purchased equipment for $14,000 cash.

Answer 1

LANNI LTD. Statement of Cash Flows For the Year Ended December 31, 2011
Cash flow from operating activities
Net income		75600
Adjustments to reconcile net income to net cash flow
Depreciation expense	30100
Loss on sale of equipment	2800
Gain on sale of long-term investment	(8400)
Increase in accounts receivable	(37100)
Increase in inventories	(22400)
Decrease in accounts payable	(12100)	(47100)
Net cash flow provided by operating activities		28500
Cash flow from investing activities
Purchase of equipment	(14000)
Sale of long term investment	21000
Sale of equipment	4900
Net cash used by investing activities		11900
Cash flow from financing activities
Issuance of bonds payable	17500
Payment of cash dividends	(35500)
Net cash provided by financing activities		(18000)
Net increase in cash		22400
Cash at beginning of period		25200
Ending cash balance, Dec. 31, 2019		47600

Dividends = retained earnings beginning + net income – retained earnings ending + decrease in dividends payable = 60200+75600-100800+500 = 35500

Depreciation expense = 15400+14700

Loss on sale of equipment = (22400-14700)-4900 = $2800

Gain on sale of long term investment = 21000-12600 = 8400