homework

BSG 507

Prepare a statement of cash flows (using the indirect method) for the Midland Manufacturing Corporation for the year ending December 2010, based on the following comparative balance sheets.

Midland Manufacturing Corporation
Comparative Balance Sheets (in Millions of Dollars)*
December 31, December31,
2009 2010
Assets
Current assets:
Cash $ 4.9 $ 0.8
Accounts receivable, net 7.2 7.5
Inventories 13.8 14.5
Total current assets $25.9 $ 22.8
Property and equipment $80.7 $115.0
Less Accumulated depreciation 16.3 25.8
Net property and equipment $64.4 $ 89.2
Total assets $90.3 $112.0
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 8.0 $ 9.5
Other current liabilities 6.0 8.2
Total current liabilities $14.0 $ 17.7
Long-term debt 18.8 31.8
Deferred federal income taxes $ 1.2 $ 1.4
Stockholders’ equity:
Common stock $ 3.0 $ 3.0
Additional paid-in capital 29.0 29.0
Retained earnings 24.3 29.1
Total stockholders’ equity $56.3 $ 61.1
Total liabilities and stockholders’ equity $90.3 $112.0

December 31.
2010
Cash Flows from Operating Activities:
Net income 8.3
Adjustments to reconcile net invome to net cash flows from operating activities:
Depreciation, building&equipment 9.5
Amortization, patent -
Gain on sale of equipment 1.0
Changes in current assets and current liabilities:
Increase in accounts receivable 0.3
Increase in inventory 0.7
Decrease in prepaid expenses -
Increase in accounts payable 1.5
Increase in accrued liabilities 3.7
Net cash flows from operating activities
Cash Flows from Investing Activities:
Purchase of equipment 35.7
Sale of equipment 1.0
Purchase of patent