AC 302 CHAPTER 5 PROBLEM QUESTION 6

AC 302 CHAPTER 5 PROBLEM QUESTION 6 
Name				Date			
Instructor				Course			
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield							
Primer on Using Excel in Accounting by Rex A Schildhouse							
							
P5-6 (Preparation of a Statement of Cash Flows and a Balance Sheet) Lansbury Inc. had the balance sheet shown on the following page at December 31, 2011.							
							
							
LANSBURY INC.							
Balance Sheet							
December 31, 2011							
Cash		$20,000 	Accounts Payable		$30,000 		
Accounts Receivable		21,200 	Notes Payable (Long-term)		41,000 		
Investments		32,000 	Common Stock		100,000 		
Plant Assets (Net)		81,000 	Retained Earnings		23,200 		
Land		40,000 					
		$194,200 			$194,200 		
							
During 2012 the following occurred:							
1. Lansbury Inc. sold part of its investment portfolio for					$15,000 	This transaction	
resulted in a gain of		$3,400 	for the firm. The company classifies its investments as available-for-				
sale.							
2. A tract of land was purchased for			$18,000 	cash.			
3. Long-term notes payable in the amount of			$16,000 	were retired before maturity by paying			
$16,000 	cash. 						
4. An additional 	$20,000 	in common stock was issued at par.					
5. Dividends totaling		$8,200 	were declared and paid to stockholders.				
6. Net income for 2012 was		$32,000 	after allowing for depreciation of			$11,000 	
7. Land was purchased through the issuance of				$30,000 	in bonds.		
8. At December 31, 2012, Cash was			$32,000 	Accounts Receivable was		$41,600 	
and Accounts Payable remained at			$30,000 				
							
Instructions:							
(a) Prepare a statement of cash flows for 2012.							
							
	LANSBURY INC.						
	Statement of Cash Flows						
	For the Year Ended December 31, 2012						
	Cash flows from operating activities						
	Title				Amount		
	Account Title						
							
	Account Title			Amount			
	Account Title			Amount			
	Account Title						
				Amount	Formula		
	Net cash provided by operating activities		20200		Formula		
							
	Cash flows from investing activities						
	Account Title	17000		Amount			
	Account Title	-18000		Amount			
	Net cash used in investing				Formula		
							
	Cash flows from financing activities						
	Account Title			Amount			
	Account Title			Amount			
	Account Title			Amount			
	Net cash used by financing activities				Formula		
							
	Net increase in cash				Formula		
	Cash at beginning of year				Amount		
	Cash at end of year				Formula		
							
	Enter text as appropriate						
	Enter text as appropriate						
							
(b) Prepare an unclassified balance sheet as it would appear at December 31, 2012.							
							
LANSBURY INC.							
Balance Sheet							
December 31, 2012							
Assets				Liabilities and Stockholders’ Equity			
Account Title		Amount		Account Title		Amount	
Account Title		Amount		Account Title		Amount	(4)
Account Title		Amount	(1)	Account Title		Amount	(5)
Account Title		Amount	(2)	Account Title		Amount	(6)
Account Title		Amount	(3)	Account Title		Amount	(7)
Total assets		Formula		Total Liabilities and SHE		Formula	
							
(1)	Formula or calculation area as desired.						
(2)	Formula or calculation area as desired.						
(3)	Formula or calculation area as desired.						
(4)	Formula or calculation area as desired.						
(5)	Formula or calculation area as desired.						
(6)	Formula or calculation area as desired.						
(7)	Formula or calculation area as desired.						
							
"(c) How might the statement of cash flows help the user of the financial statements? Compute two cash
     flow ratios."							
							
							
Enter text answer here							
							
							
							
							
							
							
							
							
							
							
An analysis of Lansbury- free cash flow indicates it is negative as shown below:							
							
	Free Cash Flow Analysis						
	Net cash provided by operating activities			Amount			
	Less:   Purchase of land			Amount			
	Dividends			Amount			
	Free cash flow			Formula			
							
Enter first ratio here							
							
Enter second ratio here							
							
Comments as desired