Question

Exercise 5-16 (Part Level Submission) A comparative balance sheet for Wildhorse Corporation is presented as follows. December 31 Assets 2020 2019 Cash $ 72,700 $ 22,000 Accounts receivable 83,780 68,080 Inventory 181,780 191,080 Land 72,780 112,080 Equipment 261,780 202,080 Accumulated Depreciation-Equipment (70,780 ) (44,080 )    Total $602,040 $551,240 Liabilities and Stockholders' Equity Accounts payable $ 35,780 $ 49,080 Bonds payable 150,000 200,000 Common stock ($1 par) 214,000 164,000 Retained earnings 202,260 138,160    Total $602,040 $551,240 Additional information: 1. Net income for 2020 was $128,560. No gains or losses were recorded in 2020. 2. Cash dividends of $64,460 were declared and paid. 3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

(a) Prepare a statement of cash flows for 2020 for Wildhorse Corporation. (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

Particulars	$	$
Cash flow from Operating Activities
Net income	128,560
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation on equipment	26,700
Changes in current operating assets and liabilities:
Accounts receivable increase	-15,700
Inventory decrease	9,300
Accounts payable decrease	-13,300
Net cash provided by Operating Activities		135,560
Cash flow from Investing Activities
Sale of land	39,300
Purchase equipment	-59,700
Net cash used in Investing Activities		-20,400
Cash flow from Financing Activities
Dividend paid	-64,460
Net cash used in Financing Activities		-64,460
Net increase in Cash and Cash Equivalents(I +II +III)		50,700
Add: Cash in the beginning of the period		22,000
Cash at the end of the period		72,700
Non cash financing activities
Issue of common stock of $50,000 to retire bonds of $50,000

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