Question

Condensed financial data of Cheng Inc. follow.

CHENG INC. Comparative Balance Sheets December 31
Assets		2020			2019
Cash		$100,100			$47,600
Accounts receivable		92,800			33,700
Inventory		111,500			101,700
Prepaid expenses		29,400			25,700
Investments		140,200			114,100
Equipment		264,000			241,200
Accumulated depreciation-equipment		(47,500	)		(52,100	)
Total		$690,500			$511,900
Liabilities and Stockholders’ Equity
Accounts payable		$111,200			$67,000
Accrued expenses payable		16,500			17,000
Bonds payable		114,400			149,800
Common stock		219,100			174,000
Retained earnings		229,300			104,100
Total		$690,500			$511,900

CHENG INC. Income Statement For the Year Ended December 31, 2020
Sales revenue				$391,400
Less:
Cost of goods sold		$135,700
Operating expenses, excluding depreciation		11,100
Depreciation expense		32,300
Income tax expense		27,600
Interest expense		4,500
Loss on disposal of plant assets		7,500		218,700
Net income				$172,700

Additional information:

1.		New equipment costing $79,700 was purchased for cash during the year.
2.		Old equipment having an original cost of $56,900 was sold for $12,500 cash.
3.		Bonds matured and were paid off at face value for cash.
4.		A cash dividend of $47,500 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method.(Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		172700
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	32300
Loss on disposal of plant assets	7500
Increase in Accounts receivable	-59100
Increase in inventory	-9800
Increase in Prepaid expenses	-3700
Increase in accounts payable	44200
Decrease in accrued expenses payable	-500
		10900
Net cash provided by operating activities		183600
Cash Flows from Investing Activities:
Purchase of Equipment	-79700
Sale of Equipment	12500
Purchase of Investments	-26100
Net Cash used by Investing Activities		-93300
Cash Flows from Financing Activities
Payment of Cash Dividends	-47500
Redemption of Bonds Payable	-35400
Issuance of Common Stock	45100
Net Cash Used by Financing Activities		-37800
Net Increase in Cash		52500
Cash at Beginning of Period		47600
Cash at End of Period		100100