Preparing a statement of cash flows. (Adapted from CPA examination.) The management of Warren Corporation, concerned over a decrease in cash, provides you with the comparative analysis of changes in account balances between June 30, 2008, and June 30. 2009, appearing in Exhibit I5.8.

During the year ended June 30, 2009, Warren Corporation engaged in the following transactions:
(1) Purchased new machinery for $463,200. In addition, it sold certain obsolete machinery, having a carrying value of $73,200, for $57,600. It made no other entries in Machinery and Equipment or related accounts other than prois1ons for depreciation.
(2) Paid $2,400 of legal costs in a successful defense of a new patent, which it correctly debited to the Patents account. It recorded patent amortization amounting to $5,040 during the year ended June 30. 2009.
(3) Purchased 120 preferred shares, par value $100, at $110 and subsequently canceled the shares. Warren Corporation debited the premium paid to Retained Earnings.
(4) On June 10, 2009, the board of directors declared a cash dividend of $0.24 per share, payable to holders of common stock on July 10, 2009.
(5) The following illustration presents a comparative analysis of retained earnings as of June 30, 2008, and June 30, 2009:

(6) Warren Corporation wrote off accounts totaling $3,600 as uncollectible during 2009.
a. Prepare a T-account work sheet for the preparation of a statement of cash flows.
b. Prepare a formal statement of cash flows for Warren Corporation for the year ending June 30, 2009, using the indirect method for presenting cash flow fromoperations.

Warren Corporation Changes in Account Balances Between June 30, 2008 and June 30, 2009 (Problem 7) EXHIBIT 15.8 June 30 2009 2008 DEBIT BALANCES $ 174,000 S 223,200 Cash Accounts Receivable 306,000 327,600 Inventories . 579,600 645,600 Securities Held for Plant Expansion Purposes 180,000 Machinery and Equipment 1,112,400 776,400 Leasehold Improvements . 104,400 104,400 Patents 36,000 33,360 Totals $2,489,760 $2.113,200 EREDIT BALANCES $ 19,200 Allowance for Uncollectible Accounts S 20,400 .. Accumulated Depreciation of Machinery and Equipment Accumulated Amortization of Leasehold Improvements Accounts Payable..... Cash Dividends Payable... 446,400 499,200 69,600 58,800 279,360 126,000 48,000 Current Portion of 6% Serial Bonds Payable 6% Serial Bonds Payable (noncurrent portion) 60,000 60,000 300,000 360,000 Preferred Stock 108,000 120,000 Common Stock 600,000 600,000 Retained Earnings 506,400 321,600 Totals $2,489,760 $2,113,200