A comparative balance sheet for Hartman Corporation is presented below: HARTMAN

Question

A comparative balance sheet for Hartman Corporation is presented below:
HARTMAN CORPORATION
Comparative Balance Sheet
2010 2009
Assets
Cash $ 71,000 $ 31,000
Accounts receivable (net) 65,000 60,000
Prepaid insurance 30,000 17,000
Land 18,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Total Assets $234,000 $195,000

Liabilities and Stockholders' Equity
Accounts payable $ 11,000 $ 6,000
Bonds payable 27,000 19,000
Common stock 140,000 115,000
Retained earnings 56,000 55,000
Total liabilities and stockholders' equity $234,000 $195,000

Additional information:
1. Net incomess for 2010 is $15,000.
2. Cash dividends of $14,000 were declared and paid in 2010.
3. Land was sold for cash at a loss of $4,000. This was the only land
transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of
$10,000 was sold for $5,000 cash.
5. $22,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair market value of
the stock at the time of the exchange was $25,000.

Instructions
Prepare a statement of cash flows for the year ended 2010, using the
indirect method.

Explanation / Answer

Cash flows from operating activities ------------------------------------------- Net Loss ($10,000) Adjustments for Depreciation $17,000 Operating profit before working capital change $7,000 Loss on sale of land $4,000 Increase in Accounts Receivables ($10,000) Increase in Prepaid Insurance ($8,000) Increase in Accounts Payables $5,000 Cash generated from operation ($2,000) Cash from investing activities ------------------------------------ Proceeds of sale of land $18,000 Equipment $5,000 Purchase of equipment (25,000) ($2,000) ($4,000) Cash flow from financing activities ----------------------------------------- Dividend paid ($14,000) Proceeds from Issue of shares $25,000 Bonds retired ($22,000) Proceeds from issue of Bonds $30,000 Net increase in cash & cash equivalents $15,000 Cash & cash equivalents at the begining $31,000 Cash & cash equivalents at the end $46,000 =========

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