how might the statement of cash flows help the user of the financial statements comp 644426

(Preparation of a Statement of Cash Flows and a Balance Sheet) Lansbury Inc. had the balance sheet shown on the next page at December 31, 2011.

LANSBURY INC.
  BALANCE SHEET
  DECEMBER 31, 2011

Cash

$20,000

Accounts   payable

$30,000

Accounts   receivable

21,200

Notes   payable (long term)

41,000

Investments

32,000

Common   stock

100,000

Plant   assets (net)

81,000

Retained   earnings

23,200

Land

40,000

 

$194,200

 

$194,200

   

During 2012, the following occurred.

1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available for sale.

2. A tract of land was purchased for $18,000 cash.

3. Long term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash.

4. An additional $20,000 in common stock was issued at par.

5. Dividends of $8,200 were declared and paid to stockholders.

6. Net income for 2012 was $32,000 after allowing for depreciation of $11,000.

7. Land was purchased through the issuance of $30,000 in bonds.

8. At December 31, 2012, Cash was $32,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000.

Instructions

(a) Prepare a statement of cash flows for 2012.

(b) Prepare an unclassified balance sheet as it would appear at December 31, 2012.

(c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.