QUESTION #3 Statement of Cash Flow REMEMBER THE PROPER FORMAT OF THIS STATEMENT IS TO BALANCE CASH AND CASH EQUIVALENTS. Lanni Ltd.'s comparative balance sheet information at December 31, 2011 and 2010, and its income stan year ended December 31, 2011, are as follows: Lanni Ltd. Comparative Balance Sheet Information December 31 Net 2011 2010 Change Cash... $ 35,000 5 18,200 $ 16,800 Cash equivalents .................. 12,600 7,000 5,600 Accounts receivable....... 64,400 27,300 37,100 Inventory .......................... 83,300 60,900 22,400 Long-term investment.......... -0. 12,600 (12,600) Land 56,000 56,000 -- Building and equipment....... 324,100 332,500 (8,400) Accumulated depreciation.... 86,100 70,700 (15,400) Accounts payable............... 14,900 27,000 (12,100) Dividends payable.............. 500 1,000 (500) Bonds payable................... 17,500 -0 17,500 Preferred shares................ 59,500 59,500 -0- Common shares............. 296,100 296,100 Retained earnings........... 100,800 60,200 40,600 Other information: Net Income for the year was $75,600. During 2011, the following transactions occurred: 1. Issued $17,500 of bonds payable at face value. 2. Sold the long-term investment on January 1, 2011, for $21,000. 3. Sold equipment for $4.900 cash that had originally cost $22,400 and had $14,700 of accumulated depreciation. 4. Purchased equipment for $14,000 cash. piS Suitement olash Flow Pr PREPARING A STATEMENT OF CASH FLOW- FLOW- using the INDIRECT METHUN Comparative financial nformation 2011 2010 Source (Inflow) or Calculate the $ change & determine if it is an Increase or Decrease Use (Outflow) Balancing or Reconciling Cash Cash Equivalents Accounts Receivable Inventory Long Term Investment Land Ruilding and Equipment ..cc. Depreciation Accounts Payable Dividends Payable Bonds Payable Preferred Shares Common Shares Retained Earnings Reconcile Accumulated Depreciation Beginning Balance, Accumulated Depreciation + Depreciation Expense - Accumulated Depreciation for PP&E that has been sold = Ending Balance, Accumulated Depreciation PP&E Reconcile if you PURCHASED and SOLD PP&E Beginning Balance, PP&E + PPE Purchases - Sold PPE (original purchase price) = Ending Balance, PPE Calculate Book Value of P.P. & Equipment SOLD Price Asset was sold for is a source of cash. This amount must be entered in the investment section as a source of cash. Original Cost of Equipment (Purchase Price) - Accumulated Depreciation for PP&E that has been sold = Book Value GAIN (Sales Price > Book Value) LOSS (Sales Price Original Value) LOSS (Sales Price