Question

Selected financial statement information and additional data for Ivanhoe Co. is presented below. Cash Accounts receivable (net) Inventory Land Equipment TOTAL December 31 2019 2020 $41,000 $78,500 86,000 145,000 169,000 200,000 59,000 20,000 502,000 785,000 $857,000 $1,228,500 Accumulated depreciation Accounts payable Notes payable - short-term Notes payable - long-term Common stock Retained earnings TOTAL $83,000 $114,000 48,000 85,000 65,000 28,000 167,000 300,000 422,000 488,000 72,000 213,500 $857,000 $1,228,500 Additional data for 2020: 1. Net income was $223,000. 2. Depreciation was $31,000. 3. Land was sold at its original cost. 4. Dividends of $81,500 were paid. 5. Equipment was purchased for $84,000 cash. 6. A long-term note for $199,000 was used to pay for an equipment purchase. 7. Common stock was issued to pay a $66,000 long-term note payable. Prepare a statement of cash flows for the year ending December 31, 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

с $223,000 Statement of cash flows For the year ended December 31, 2020 3 Cash flows from operating activities: 4 Net income Adjustments to reconcile net income to 5 net cash flows from operating activities: 6 Add: 7 Depreciation expense $31,000 Increase in accounts payable $37,000 9 Less: Increase in account receivables -$59,000 Increase in inventory -$31,000 12 Decrease in note payable - long term Decrease in notes payable - short term -$37,000 14 Net cash flow from operatin activities 15 16 Cash flow from investing activity: 17 Land sold $39,000 18 Equipment purchased -$84,000 19 Cash flow from financing activities: 20 Dividend paid 21 Net decrease in cash 13 -$59,000 $164,000 -$45,000 -$81,500 $37,500 23 Add: Beginning cash balance 24 Ending cash balance $41,000 $78,500

223000 Statement of cash flows For the year ended December 31, 2020 3 Cash flows from operating activities: 4 Net income Adjustments to reconcile net income to 5 net cash flows from operating activities: 6 Add: Depreciation expense 31000 Increase in accounts payable =85000-48000 Less: 10 Increase in account receivables =86000-145000 11 Increase in inventory =169000-200000 12 Decrease in note payable - long term =300000-167000-199000+66000 13 Decrease in notes payable - short term =28000-65000 14 Net cash flow from operatin activities =SUM(B7:B13) =SUM(C4:C14) 15 =59000-20000 -84000 =SUM(B17:B18) 16 Cash flow from investing activity: 17 Land sold 18 Equipment purchased 19 Cash flow from financing activities: 20 Dividend paid 21 Net decrease in cash 22 23 Add: Beginning cash balance 24 Ending cash balance -81500 =SUM(C15:C20) 41000 =C23+C21