Question

Part IV: Balance Sheet and Statement of Cash Flows (22 points) 1. The balance sheets for Smith Company showed the following information. Additional information concerning transactions and events during 2019 are presented below. $520 Smith Company Comparative Balance Sheet (in 5) 12/31/19 Cash 800 Short-term Investments 850 Accounts Receivable 500 Inventory 1,450 Prepaid Rent 1,500 Land 3.500 (600) Equipment $8.520 12/31/18 $130 200 400 550 1,300 2,500 3,200 1440 $7840 Accumulated Depreciation Total Assets $2,300 900 $1,800 1,600 2.300 5,700 2.700 5,900 Accounts Payable Salaries and Wages Payable Notes Payable Total Liabilities 2,350 1,690 600 750 (150 (480) 2.149 $7.849 2620 $8.520 Common Stock Retained Earnings (Treasury Stock) Total Stockholders' Equity Total Liabilities and Stockholders' Equity Additional data: 1. Net income for the year 2019, $250. 2. The company issued a notes payable of $300 to buy equipment worth $300 No equipment was sold during the year. 3. Land was sold for $900 cash. No new land was purchased during the year 4. Cash dividends were declared and paid during the year. Construct the statement of cash flows for Smith Company for the year ended December 31 2019. (16 points)

Answer 1

Smith Company Statement of Cash Flows For the year ended December 31, 2019
Cash Flows from Operating Activities
Net Income		$ 250
Adjustments to reconcile net income to net cash provided by operations
Depreciation expense	160
Loss on sale of land	100
Increase in accounts receivable	(450)
Decrease in inventory	50
Increase in prepaid rent	(150)
Increase in accounts payable	500
Decrease in salaries and wages payable	(700)	(490)
Net cash used for operating activities		(240)
Cash flows from Investing Activities
Sale proceeds of land	900
Cash flows from investing activities		900
Cash flows from Financing Activities
Cash from Notes Payable	100
Cash from issuance of common stock	660
Cash paid for treasury stock	(330)
Cash paid for dividends	(100)
Net cash flows from Financing Activities		330
Net increase ( decrease ) in cash and cash equivalents		990
Beginning cash and cash equivalents ( 130 + 200)		330
Ending cash and cash equivalents ( 520 + 800)		1,320