Problem 5-6 (Part Level Submission) LANSBURY INC. BALANCE SHEET DECEMBER 31, 201
ID: 2403575 • Letter: P
Question
Problem 5-6 (Part Level Submission)
LANSBURY INC.
BALANCE SHEET
DECEMBER 31, 2016
(a)
Adjustments to reconcile net income to
Problem 5-6 (Part Level Submission)
Lansbury Inc. had the following balance sheet at December 31, 2016.LANSBURY INC.
BALANCE SHEET
DECEMBER 31, 2016
During 2017, 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 $13,000 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 of $8,200 were declared and paid to stockholders. 6. Net income for 2017 was $32,000 after allowing for depreciation of $11,000. 7. Land was purchased through the issuance of $35,000 in bonds. 8. At December 31, 2017, Cash was $37,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000.
Explanation / Answer
Cash flow Statement: Cash flows from Operating activities: Net income for the period 32000 Adjustment required Depreciation 11000 Gain n sale of investment -3400 Increase in Accounts receivable -20400 Net cash provided from Operating activities 19200 Cash flows from Investing activities: Sale of investment 15000 Purchase of land -13000 Net ccash provided from investing activities 2000 Cash flows from Financing activities: Issue of c ommon Stock 20000 Dividend paid -8200 Retirement of bonds -16000 Net cash used in financing activities -4200 Net increase in cassh 17000 Beginning balance of cash 20000 Ending balance of cash 37000
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