A Comparative Balance Sheet for Austin Corporation Is Presented Below

question 112

Essay

A comparative balance sheet for Austin Corporation is presented below: $\begin{array}{|l|r|r|}\hline & \underline{20 X 7} & \underline{20 X 6} \\\hline \text { Assets } & & \\\hline \text { Cash } & \$ 39,000 & \$ 31,000 \\\hline \text { Trade receivables (net) } & 73,000 & 60,000 \\\hline \text { Prepaid insurance } & 19,000 & 17,000 \\\hline \text { Land } & 18,000 & 40,000 \\\hline \text { Equipment } & 70,000 & 60,000 \\\hline \text { Accumulated depreciation } & (20,000 & (13,000 \\\hline \text { Total assets } & \$ 199,000 & \$ 195,000 \\\hline \text { Liabilities and Shareholders' Equity } & & \\\hline \text { Trade payables } & \$ 11,000 & \$ 6,000 \\\hline \text { Bonds payable } & 27,000 & 19,000 \\\hline \text { Common shares } & 140,000 & 115,000 \\\hline \text { Retained earnings } & 21,000 & \underline{55,000} \\\hline \text { Total liabilities and shareholders' equity } & \$ 199,000 & \$ 195,000 \\\hline\end{array}$ Additional information for 20X7:
1. Net loss for 20X7 is $25,000.
2. Cash dividends of $9,000 were declared and paid in 20X7 .
3. Land was sold for cash at a loss of $10,000. This was the only land transaction during the year .
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $12, 000 of bonds were retired during the year at their carrying amount.
6. Equipment was acquired for common shares. The fair value of the shares at the time of the exchange was $25,000. Prepare a cash ?ow statement for the year ended 20X7, using the indirect method.

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Definitions:

Intragroup Dividends

Dividends paid between companies within the same group, often eliminating in consolidation for group financial statements.

Share Exchange

A transaction where companies trade shares with each other to form a strategic partnership or complete an acquisition or merger.

ASX

The Australian Securities Exchange, the primary stock exchange in Australia.

Cost of Acquisition

The total expenses incurred when acquiring an asset, including the purchase price and any other costs associated with the acquisition.