Question

12 x fe F А D E 1 RedBear Landscaping Company is preparing its annual financial statements at December 31, 2 2019. The financial statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized (meaning not in proper dassified format) as follows: 4 Balance Sheet at December 31 2020 2019 Change 5 Cash 35,120 $ 24,700 $ 10,420 6 Accounts Receivable 1,700 1,200 $ 500 7 Supplies 7,000 10,000 $ (3,000) 8 Prepaid Expenses 8,400 8,000 $ 400 9 Equipment 22,000 22,000 $ 10 Vehicles 50,000 30,000 $ 20,000 11 Office Furniture 5,000 5,000 $ 12 Accumulated Depreciation (22,000) (11,000) $ (11,000) $ 107,220 $ 89,900 $ 17,320 $ 14 Accounts Payable 15 Accrued Expenses Payable 16 Loan Payable (due in five years) 17 Common Stock, $1 par 18 Additional Paid in Capital 19 Retained Earnings 5,000 2,400 44,500 4,000 28,000 23,320 107,220 4,600 1,800 49,500 3,000 19,000 12,000 89.900 $ $ $ $ $ $ 400 600 (5,000) 1,000 9,000 11,320 TRUE $ $ TRUE $ 21 Income Statement for 2019 22 Services Revenue 23 Wage Expense 24 Insurance Expense 25 Rent Expense 26 Advertising Expense 27 Depreciation Expense 28 Interest Expense 29 Income tax expense 30 Net Income 79,200 31,680 8.000 6,000 1,000 11,000 2,800 1,300 17,420 31 Additional Data which are reflected in the FS above. 32 Note: certain data changed from SLAs 2 & 3 to accommodate this SLA) 33 a. The company purchased a new vehicle for $20,000. 34 b. The company paid $4,000 on the long-term Loan Payable. 35 C. The company issued new shares of common stock for $10,000 cash 10,000 Checklist SLA 5 Sheet1 Sheet2 Ready

Answer 1

1-Statement of cash flow
cash flow from operating activities
net income		17420
depreciation expense		11000
changes in working capital
Increase In A/R		-500
Increase in prepaid expense		-400
decrease in supplies		3000
Increase in A/P		400
increase in accrued expenses payable		600
cash flow from operating activities			31520
cash flow from Investing activities
purchase of vehicle		-20000
cash flow from Investing activities			-20000
cash flow from financing activities
payment of loan payable		-5000
common stock issued		10000
dividend paid	11320-17420	-6100
cash flow from financing activities			-1100
net cash flow during the year			10420
beginning cash balance			24700
year end cash balance			35120
2-
cash flow from operating activities shows a positive cash flow due to good performance of company on operating activities. Operating activities provide 31520 of cash this was possible due to good operating results and efficient management of working capital.
Cash flow from Investing activities shows a negative cash flow as some investments are made in assets due to which investment activities cash flow was negative
Cash flow form financing activities shows a negative cash flow. Company has paid the loans payable and increasing the funds by arranging it from common equity. Dividend is paid to the shareholders and end of year balance shows the sufficient availability of cash balance at year end. Net cash flow during the year shows a positive cash flow.
3-	Quality of income ratio = cash flow from operating activities/net income	31520/17420	1.81	the ratio shows an improved performance over the previous year and it shows a high quality of earning which are coming from daily operations of business.