A comparative balance sheet for Hartman Corporation is presented below: HARTMAN
ID: 2435563 • Letter: A
Question
A comparative balance sheet for Hartman Corporation is presented below:
HARTMAN CORPORATION
Comparative Balance Sheet
2010 2009
Assets
Cash $46,000 $31,000
Accounts Receivable (net) 70,000 60,000
Prepaid Insurance 25,000 17,000
Land 18,000 40,000
Eqipment 70,000 60,000
Accumulated Depreciation (20,000) (13,000)
Total Assets $209,000 $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 Earning 31,000 55,000
Total Liabilities & Stockholders' Equity $ 209,000 $ 195,000
Additional information:
1. Net loss for 2010 is $10,000.
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. Thank You
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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