Question

The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below. $202,250 GREAT ADVENTURES, INC. Income Statement For the year ended December 31, 2022 Net revenues: Expenses: Cost of goods sold $40,300 Operating expenses 73,360 Depreciation expense 19,950 Interest expense 11, 274 Income tax expense 16,300 Total expenses Net income 161, 184 $ 41,066 GREAT ADVENTURES, INC. Balance Sheets December 31, 2022 and 2021 2022 2021 Increase (I) or Decrease (D) $ $ 52,620 $ 318,014 50,840 10,600 1,260 265,394 50,840 10,600 4,680 (I) (I) (1) (D) 5,940 Assets Current assets: Cash Accounts receivable Inventory Other current assets Long-term assets: Land Buildings Equipment Accumulated depreciation Total assets 860,000 908,000 99,080 (28,850) $2,218,944 860,000 (1) 908,000 (1) 41,080 (I) 19,950 (1) 58,000 (8,900) $119,900 $ $ $ 33,120 (I) Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Other current liabilities Notes payable (current and long-term) Stockholders' equity: Common stock Paid-in capital Retained earnings Treasury stock Total liabilities and stockholders' equity 36,640 930 16,300 31,800 883, 078 3,520 930 14,360 1,940 31,800 849,478 (I) (I) (I) 33,600 20,000 156,000 1,231,600 60,596 (198,000) $2,218,944 35,250 136,000 (1) 1,231,600 (I) 25,346 (I) (198,000) (I) $119,900 Additional Information for 2022: 1. Land of $860,000 was obtained by issuing a note payable to the seller. 2. Buildings of $908,000 and equipment of $41,080 were purchased using cash. 3. Monthly payments during the year reduced notes payable by $10,522. 4. Issued common stock for $1,360,000. 5. Purchased 13,600 shares of treasury stock for $33 per share. 6. Sold 7,600 shares of treasury stock at $34 per share. 7. Declared and paid a cash dividend of $15,720.

Answer 1

Solution

GREAT ADVENTURES INC.
Cash Flow Statement
For year ended 31st December 2020
A. Cash Flows from Operating Activity
Net Income		$                  41,066.00
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	$          19,950.00
Changes in current operating assets and liabilities:
Increase in Accounts receivables	$        (50,840.00)
Increase in Accounts payables	$          33,120.00
Increase in Inventory	$        (10,600.00)
Decrease in other current assets	$             4,680.00
Increase in taxes payable	$             1,940.00
Increase in other current liabilities	$          31,800.00
		$                  30,050.00
Net cash flow from Operating activities		$                  71,116.00
B. Cash flows from Investing Activities
Purchase of equipment	$        (41,080.00)
Purchase of Building	$      (908,000.00)
Net cash flow used for investing activities		$             (949,080.00)
C. Cash Flows from Financing activities
Cash received from sale of common stock	$    1,360,000.00
Cash paid for dividends	$        (15,720.00)
Purchase of Tresury stock	$      (448,800.00)
Resissue of Tresury stock	$        258,400.00
Repayment of loan	$        (10,522.00)
Cash flows from Financing activities		$            1,143,358.00
Net Increase (Decrease) in Cash [A+B+C]		$               265,394.00
Cash at the beginning		$                  52,620.00
Cash at the end		$               318,014.00
Note: Non cash activity
Issue of notes payable in exchange of Building		$               860,000.00

General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.