P 21–11 - Arduous Company - Prepare a statement of cash flows; direct method ● LO3 LO8
The comparative balance sheets for 2011 and 2010 and the income
statement for 2011 are given below for Arduous Company. Additional
information from Arduous’s accounting records is provided also.
a. During 2011, $6 million of customer accounts were written off as uncollectible.
b. Investment revenue includes Arduous Company’s $6 million share of the net income of Demur Company, an equity method investee.
c. Treasury bills were
sold during 2011 at a gain of $2 million. Arduous Company classifies
its investments in Treasury bills as cash equivalents.
d. A machine originally
costing $70 million that was one-half depreciated was rendered unusable
by a rare flood. Most major components of the machine were unharmed and
were sold for $17 million.
e. Temporary
differences between pretax accounting income and taxable income caused
the deferred income tax liability to increase by $3 million.
g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.
h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million.
j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.
k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.
Required:
Prepare the statement of cash flows of Arduous Company for the year
ended December 31, 2011. Present cash flows from operating activities by
the direct method. (A reconciliation schedule is not required.)
Click here: ACC 306 Week 5 P 21-11 Arduous Company - The comparative balance sheets for 2011 and 2010 and the income statement for 2011 are given below for Arduous Company
