Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 111

Prepare balance sheet and retained earnings statement using statement of cash flows data Following are a statement of cash flows (indirect method) for Harris, Inc., for the year ended December 31, 2011, and the firm’s balance sheet at December 31, 2010:

HARRIS, INC. Statement of Cash Flows For the Year Ended December 31, 2011
Cash Flows from Operating Activities:
Net income	$ 13,000
Add (deduct) items not affecting cash:
Depreciation expense	29,000
Increase in accounts receivable	(6,000)
Decrease in merchandise inventory	30,000
Increase in accounts payable	3,000
Net cash provided by operating activities	$ 69,000
Cash Flows from Investing Activities:
Purchase of buildings	(90,000)
Proceeds from sale of land at its cost	7,000
Net cash used by investing activities	$(83,000)
Cash Flows from Financing Activities:
Payment of short-term debt	(4,000)
Payment of notes payable	(9,000)
Proceeds from issuance of long-term debt	15,000
Proceeds from issuance of common stock	8,000
Payment of cash dividends on common stock	(5,000)
Net cash provided by financing activities	$ 5,000
Net decrease in cash for the year	$ (9,000)

HARRIS, INC. Balance Sheet At December 31, 2010
Assets
Cash	$ 15,000
Accounts receivable	61,000
Merchandise inventory	76,000
Total current assets	$152,000
Land	34,000
Buildings	118,000
Less: Accumulated depreciation. .	(72,000)
Total land and buildings	$ 80,000
Total assets	$232,000
Liabilities
Accounts payable	$ 58,000
Short-term debt	16,000
Notes payable	33,000
Total current liabilities	$107,000
Long-term debt	50,000
Owners’ Equity
Common stock, no par	$ 20,000
Retained earnings	55,000
Total owners’ equity	$ 75,000
Total liabilities and owners’ equity	$232,000

Required:

a. Using the preceding information, prepare the balance sheet for Harris, Inc., at December 31, 2011.

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b. Prepare a statement of changes in retained earnings for the year ended December 31, 2011.

Step 1 of 2

Prepare balance sheet & a statement of changes in retained earnings

a) The preparation of balance sheet for Harris , Inc., as at December 31, 2011, is as follows: