Question

Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: A. The investments were sold for $175,000 cash. B. Equipment and land were acquired for cash. C. There were no disposals of equipment during the year. D. The common stock was issued for cash. E. There was a $500,000 credit to Retained Earnings for net income. F. There was a $90,000 debit to Retained Earnings for cash dividends declared. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow for each section, if required.

Dec. 31, 20Y3 Dec. 31, 20Y2 Assets 3 Cash $155,000.00 $150,000.00 Accounts receivable (net) 450,000.00 400,000.00 Inventories 770,000.00 750,000.00 Investments 0.00 100,000.00 7 Land 500,000.00 0.00 8 Equipment 1,400,000.00 1,200,000.00 Accumulated depreciation-equipment (600,000.00) (500,000.00) Total assets $2,675,000.00 $2,100,000.00 Liabilities and Stockholders' Equity 12 Accounts payable $340,000.00 $300,000.00 13 Accrued expenses payable 45,000.00 50,000.00 14 Dividends payable 30,000.00 25,000.00 15 Common stock, $4 par 700,000.00 600,000.00 16 Paid-in capital: Excess of issue price over par-common stock 200,000.00 175,000.00 17 Retained earnings 1,360,000.00 950,000.00 Total liabilities and stockholders' equity $2,675,000.00 $2,100,000.00

Answer 1

$ 500.000 Statement of Cash flows For the Year Ended December 31,2073 Cash flows from Operating Activities: Net Income Adjustments to reconcile Net Income to Net Cash Provided by Operating activities Depreciation expenses $ 100.000 Profit on sale of Investment S (75,000) Increase in Accounts Receivables S (50.000) Increase in Inventories $ (20,000) Increase in Accounts Payable $ 40.000 Decrease in Accured expense payable S (5,000) S $ (10,000) 490,000 Net Cash Provided by Operating Activities Cash Flows from Investing Activities Sale of Investements Purchase of Land Purchase of equipment Net Cash used by investing activities $ S $ 175,000 (500,000) (200,000) S (525,000)

Cash Flows from Financing Activities Issuance of Common stock Payment of cash dividends Net Cash Used by financing activities $ S 125,000 (85,000) $ 40,000 Net Increase in Cash Cash balance as on Jan.1, 2020 Cash balance as on December 31,2020 S S $ 5,000 150.000 155,000 Working Notes: Payment of Cash Dividends Opening balance of Dividends payable Add: Dividends declared $ S $ $ S 25,000 90.000 115,000 30.000 85.000 Less: Ending balance of Dividends payable