Posted: April 19th, 2024

The balance sheets of Farrell Corporation as of December

Comprehensive - The following are the balance sheets of Farrell Corporation as of December 31, 2007 and 2006, and the statement of income and retained earnings for the year ended December 31, 2007:Balance Sheets31-Dec20072006Increase(Decrease)AssetsCash$225,000$180,000$45,000Accounts receivable, net295,000305,000-10,000Inventories549,000431,000118,000Investment in Hall, Inc., at equity73,00060,00013,000Land350,000200,000150,000Plant and equipment624,000606,00018,000Less: Accumulated depreciation-139,000-107,000-32,000Patent16,00020,000-4,000Total assets$1,993,000$1,695,000$298,000Liabilities and Stockholders’ EquityAccounts payable and accrued expenses$604,000$563,000$41,000Note payable, long-term150,000—150,000Bonds payable160,000210,000-50,000Deferred taxes payable41,00030,00011,000Common stock, $10 par410,000400,00010,000Additional paid-in capital196,000175,00021,000Retained earnings432,000334,00098,000Treasury stock, at cost—-17,00017,000Total liabilities and stockholders’ equity$1,993,000$1,695,000$298,000Statement of Income and Retained EarningsFor the Year Ended December 31, 2007Net sales$1,950,000Operating expenses:Cost of sales1,150,000Selling and administrative expenses505,000Depreciation53,0001,708,000Operating income242,000Other (income) expense:Interest expense15,000Equity in net income of Hall, Inc.-13,000Loss on sale of equipment5,000Amortization of patent4,00011,000Income before income taxes231,000Income taxes:Current79,000Deferred11,000Provision for income taxes90,000Net income$141,000Retained earnings, January 1, 2007334,000475,000Cash dividends, paid August 13, 200743,000Retained earnings, December 31, 2007$432,000Additional information:1. On January 2, 2007 Farrell sold equipment costing $45,000, with a book value of $24,000, for $19,000 cash.2. On April 2, 2007 Farrell issued 1,000 shares of common stock for $23,000 cash.3. On May 14, 2007 Farrell sold all of its treasury stock for $25,000 cash.4. On June 1, 2007 Farrell paid $50,000 to retire bonds with a face value (and book value) of $50,000.5. On July 2, 2007 Farrell purchased equipment for $63,000 cash.6. On December 31, 2007 land with a fair market value of $150,000 was purchased through the issuance of a long-term note in the amount of $150,000. The note bears interest at the rate of 15% and is due on December 31, 2012.7. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting.Required1. Prepare a worksheet (spreadsheet) to support a statement of cash flows for the Farrell Corporation for the year ended December 31, 2007, based on the preceding information.2. Prepare the statement of cash flows.

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