Problem 56 Part Level Submission LANSBURY INC BALANCE SHEET

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 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 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.

Solution

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