I need help solving this problem. Cerritos Manufacturing Comparitive Balance She

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Cerritos Manufacturing Comparitive Balance Sheet December 31, 2010 and December 31, 2009 2009 2010 Assets Cash       112,500       350,000 Accounts Receivable       350,000       281,250 Inventories       125,000       150,000 Plant and Equipment    1,000,000    1,025,000 Accumulated Depreciation      (500,000)      (525,000) Land       500,000       718,750 Total Assets    1,587,500    2,000,000 Liabilites and Equity Accounts Payable       300,000       237,500 Mortgage Payable                    -       250,000 Common Stock         75,000         75,000 Contributed Capital in excess of Par       300,000       300,000 Retained Earnings       912,500    1,137,500 Total Liabilities and Equity    1,587,500    2,000,000 Income Statement For the Year Ended December 31, 2010 Revenues    1,200,000 Gain on Sale of Equipment         50,000 Less: COGS      (640,000) Less: Depreciation Expense      (125,000) Less: Interest Expense        (35,000) Net Income       450,000 Other Information: a) Equipment with a book value of $125,000 was sold for $175,000 (original Cost was 225,000) b) Dividends of $225,000 were declared and paid. Prepare a statement of cash flows                                         -               

Explanation / Answer

Cerritos Manufacturing Statement of Cash Flows For the Year Ended December 31, 2010 Cash Flows from Operating Activities: Net income 450000 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense 125000 Gain on Sale of Equipment -50000 Decrease in Accounts receivables 68750 Increase in inventory -25000 Decrease in accounts payable -62500 56250 Net cash provided by operating activities 506250 Cash Flows from Investing Activities: Sale of Equipment 175000 Purchase of Plant and Equipment -250000 Purchase of Land -218750 Net Cash used by Investing Activities -293750 Cash Flows from Financing Activities Payment of Cash Dividends -225000 Proceeds from Mortgage Payable 250000 Net Cash provided by Financing Activities 25000 Net Increase in Cash 237500 Cash at Beginning of Period 112500 Cash at End of Period 350000

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