Question

Required information The following information applies to the questions displayed below.] Hanks Company is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Current Year Prior Year Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Fixed assets (net) Accounts payable Wages payable Note payable, long-term Common stock, no par Retained earnings $ 27,500 31,900 44,300 79,800 $183,500 $ 32,800 4,500 46,000 78,000 22,200 $183,500 $ 17,400 33,300 39,100 75,500 $165,300 $ 26,300 3,600 53,800 62,400 19,200 $ 165,300 Income statement for current year Sales Cost of goods sold Expenses Net income $ 95,000 (51,000) (37,000) $ 7,000 Additional data: a. Bought fixed assets for cash, $11,000. b. Paid $7,800 on the long-term note payable. c. Sold unissued common stock for $15,600 cash. d. Declared and paid a $4,000 cash dividend. e. Incurred the following expenses: depreciation, $6,700; wages, $14,000; taxes, $4,000; and other, $12,300.

Answer 1

Cash Flow Statement is as prepared below:

Hanks Company
Statement of Cash Flows-Indirect Method
For the year ended December 31, 20XX
Particulars	Amount ($)	Amount ($)
Cash Flows from operating activities:
Net Income		7,000
Adjustments to reconcile net income to:
Depreciation expense	6,700
Decrease in account receivable	1,400
Increase in Merchandise Inventory	-5,200
Increase in accounts payable	6,500
Increase in wages payable	900
Net Cash provided by Operating Activities		17,300
Cash flows from Investing Activities:
Purchased property, plant and equipment	-11,000
Net Cash flows used in investing activities		-11,000
Cash flows from Financing Activities:
Payment of long term note	-7,800
Proceeds from stock issuance	15,600
Payment of dividend	-4,000
Net Cash flows used in financing activities		3,800
Net increase in cash and cash equivalents		10,100
Cash balance-beginning balance		17,400
Cash balance-ending balance		27,500