RAJANEESH COMPANY

(Time: 30 minutes)

Rajaneesh Company’s balance sheet at the end of 2010 was as follows:

Assets Liabilities and Stockholders’ Equity

Cash `200,000 Current Liabilities `150,000

Other current assets 150,000 Bonds payable (face value) 60,000
Land 300,000 Dividends payable 5,000
Buildings and Equipment 630,000 Common Stock 900,000
Accumulated Depreciation- Retained Earnings 45,000

Buildings and Equipment (160,000)

Patents ___40,000 ________
Total 1,160,000 Total 1,160,000

The following information is available for 2011:

 Net income was `49,000.

 Equipment (cost `20,000, and book value, `12,000) was sold for `14,000
 Depreciation expense for building and equipment was `4,000, and patent amortization
was `3,000.
 Current assets other than cash increased by `35,000. Current liabilities at the end of the
year were `137,000.
 An addition to the building was completed at a cost of `100,000. The payment was made
by issuing common stock instead of paying cash.
 A long-term investment in stock was purchased for `25,000 by paying cash.
 Bonds payable of the face value `28,000 issued by Rajaneesh Company were purchased
by the Company by paying `33,000.
 Dividends of `30,000 were declared for the year 2011. Total dividends of `27,000 have
been paid during the year.

Required: Prepare in an appropriate form (a) statement of cash flows for 2011 using the
indirect method and (b) balance sheet as at December 31, 2011. Provide your
answer in the space provided on the next page.
Rajaneesh Company
Statement of Cash Flows for the year ending 31 December 2011

Cash flows from Operating Activities:

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Cash flows from Investing Activities:

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Cash flows from Financing Activities:

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 Rajaneesh Company
Balance Sheet as at 31 December 2011

Assets Liabilities and Stockholders’ Equity

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