following are a statement of cash flows indirect method for 248413

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.

b. Prepare a statement of changes in retained earnings for the year ended

December 31, 2011.

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