Question

Shown below are comparative balance sheets for Blossom Company.

Blossom Company Comparative Balance Sheets December 31
Assets		2022			2021
Cash		$ 102,000			$ 33,000
Accounts receivable		132,000			114,000
Inventory		250,500			283,500
Land		120,000			150,000
Equipment		390,000			300,000
Accumulated depreciation—equipment		(99,000	)		(48,000	)
Total		$895,500			$832,500
Liabilities and Stockholders’ Equity
Accounts payable		$ 58,500			$ 64,500
Bonds payable		225,000			300,000
Common stock ($1 par)		324,000			261,000
Retained earnings		288,000			207,000
Total		$895,500			$832,500

Additional information:

1.		Net income for 2022 was $139,500.
2.		Depreciation expense was $51,000.
3.		Cash dividends of $58,500 were declared and paid.
4.		Bonds payable amounting to $75,000 were redeemed for cash $75,000.
5.		Common stock was issued for $63,000 cash.
6.		No equipment was sold during 2022.
7.		Land was sold for its book value.

Prepare a statement of cash flows for 2022 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -45,000, or in parenthesis e.g. (45,000)).

Answer 1

Blossom Company
Statement of Cash Flows (Indirect Method)
For the year ended December 31, 2022
	$	$
Cash Flow from Operating Activities
Net Income	139,500.00
Adjustments to reconcile net income to net cash provided by operations:
Income Statement items not affecting cash;
Depreciation expense	51,000.00
Changes in current operating assets and liabilities:
Increase in Accounts Receivable	(18,000.00)
Decrease in Inventory	33,000.00
Decrease in Accounts Payable	(6,000.00)
Net Cash provided by Operating Activities		199,500.00
Cash Flows from Investing Activities:
Sale of Land	30,000.00
Purchase of Equipment	(90,000.00)
Net Cash used in Investing Activities		(60,000.00)
Cash Flows from Financing Activities:
Issuance of common stock	63,000.00
Payment of Cash Dividends	(58,500.00)
Redemption of Bonds	(75,000.00)
Net Cash used in Financing Activities		(70,500.00)
Net Increase in Cash		69,000.00
Add: Cash balance at the beginning of the year		33,000.00
Cash balance at the end of the year		102,000.00