The following balances are available for Chrisman Company.
December 31
Cash 2010=$8,000 2009=$10,000
Accounts receivable 2010=$20,000 2009=$15,000
Inventory 2010=$15,000 2009=$25,000
Prepaid rent 2010=$9,000 2009=$6,000
Land 2010=$75,000 2009=$75,000
Plant and equipment 2010= $400,000 2009=$300,000
Totals= 2010=$462,000 2009=$401,000
Accounts Payable 2010= $12,000 2009=$10,000
Income taxes payable 2010=$3,000 2009= $5,000
Short-term notes payable 2010= $35,000 2009= $25,000
Bonds payable 2010=$75,000 2009= $100,000
Common stock= 2010=$200,000 2009= $150,000
Retained earnings 2010=$137,000 2009=$111,000
Totals= 2010=$462,000 2009=$401,000
Bonds were retired during 2010 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $35,000. Net income was reported at $26,000.
1.) Prepare a statement of cash flows from 2010 using the indirect method in the Operating Activities section.
2.) Did Chrisman generate sufficient cash from operations to pay for its investing activities? How did it generate cash other than from operations? Explain your answers.