The balance sheets of the XYZ Limited at the end

The balance sheets of the XYZ Limited at the end of 2006 and 2007 are

as follows:

Particulars

Assets

2006

Rs.

2007

Rs.

Cash

Accounts receivable(Net)

Merchandise Inventory

20,000 15,000

45,000 50,000

40,000 65,000

Prepaid expenses

10,000

5,000

Building and equipment

Allowance for deprecation—building and equipment

Land

70,000 85,000

(7,500) (17,500)

45,000 80,000

222,500 282,500

Liabilities & Capital

Rs.

Rs.

Accounts payable

Accrued expenses

Notes payable—–

Mortgage payable

Capital stock, Rs.10 par

40,000 50,000

12,500 10,000

30,000

30,000

150,000 185,000

Retain earnings ( deficit)

(10,000)

7,500

222,500 282,500

Land was acquired for Rs. 35,000 in exchange for capital stock, par Rs. 35,000,

during the year; equipment of Rs. 15,000 was acquired for cash. Cash dividends

of Rs. 10,000 were charged to retained earnings during the year; the transfer of

net income (Rs. 27,500) to retained earnings was the only other entry in this

account.

Required:

Prepare a statement of cash flow.