Question

Your answer is partially correct. Try again. Condensed financial data of Cheng Inc. follow. CHENG INC. Comparative Balance Sheets December 31 Assets 2020 2019 Cash Accounts receivable Inventory Prepaid expenses Investments Equipment Accumulated depreciation-equipment Total $116,800 92,000 111,800 29,200 139,100 265,400 (47,900) $706,400 $48,100 32,300 102,000 25,200 113,000 242,300 (51,400) $511,500 Liabilities and Stockholders' Equity Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings Total $ 111,600 16,300 112,600 220,100 245,800 $706,400 $68,000 17,100 149,000 176,000 101,400 $511,500

Answer 1

Solution

CHENG INC.
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash flows from operating activities:
Net income		$ 1,72,400.00
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense	$   33,200.00
Loss on disposal of plant assets	$     7,500.00
Incease in accounts receivables	$ (59,700.00)
Increase in inventory	$    (9,800.00)
Increase in prepaid expense	$    (4,000.00)
Increase in accounts payable	$   43,600.00
Decrease in accrued expense payable	$       (800.00)
		$    10,000.00
Net cash from Operating Activities		$ 1,82,400.00
Cash flows from investing activities:
Sale of Equipment	$   12,900.00
Purchase of Investments	$ (26,100.00)
Purchase of Equipment	$ (80,200.00)
Net cash from Investing Activities		$   (93,400.00)
Cash flows from financing activities:
Redemption of Bonds	$ (36,400.00)
Issue of Common stock	$   44,100.00
Dividends paid	$ (28,000.00)
Net cash from Financing Activities		$   (20,300.00)
Net change in cash during the year		$    68,700.00
Add: Beginning cash balance		$    48,100.00
Ending cash balance		$ 1,16,800.00

.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.