Question

The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company. Additional Information from Arduous's accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2021 and 2e2e ($ in millions) 2021 2020 $ Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent 138 2e5 23 222 21 203 226 427 (109) 43 $ 96 224 19 215 28 140 165 430 (150) 47 $ 1,214 $ 1,399 $ $ Liabilities Accounts payable Salaries payable Interest payable (bonds) Income tax payable Deferred tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings Less: Treasury stock 65 23 25 27 41 31 89 230 (37) 95 33 19 32 23 305 (46) 425 100 475 125 90 239 (24) $ 1,399 228 $ 1,214

Answer 1

576 1 Arduous Company Statement of Cash Flows For year ended December 31, 2021($ in millions) Cash flows from operating activities: Cash inflows: From customers From investment revenue From sale of cash equivalents Cash outflows: To suppliers of goods To employees For insurance For bond interest For income taxes Net cash flows from operating activities 4 -232 -98 - 15 -28 -38 170 20 Cash flows from investing activities: Sale of machine components Purchase of long-term investment Purchase of land Net cash flows from investing activities -40 -30 -50 -75 -8 90 Cash flows from financing activities: Retirement of bonds payable Retirement of lease liability Sale of preferred stock Payment of cash dividends Purchase of treasury stock Net cash flows from financing activities Net increase in cash -61 -24 -78 42 96 Cash balance, January 1 Cash balance, December 31 138 Noncash investing and financing activities: Acquired land with cash and note acquired building with lease 61 97

33 *Working note: collection from customer Accounts receivable, at beg Add : sales Accounts receivable, at end collection from customer 224 557 Payment to employees Salaries payable, at beg Add: salaries expense Less: Salaries payable, at end Payment to employees 88 32 51 -27 23 -205 576 Payment for Income tax Income tax payable,,at beg Add : Income tax expense Less : Income tax payable, at end Add :Deferred income tax liability, at beg Less :Deferred income tax liability, at end Payment for Income tax -23 98 -41 38 19 21 22 28 cash received From investment revenue Investment revenue receivable, at beg Add: Investment revenue Less: share of net income Investment revenue receivable, at end cash received From investment revenue Payment for insurance Prepaid insurance, at end Add : Insurance expense Less: Prepaid insurance, at beg Payment for insurance 228 147 -23 -28 calculation of cash dividend paid Retained earning, Dec 31, 2020 Add: net income Less: stock dividend (10*7.5) Less :Retained earning, Dec 31, 2021 Cash dividend paid 15 -23 1 -75 -239 61 19 43 95 195 Payment for Bond interest Bond interest payable, at beg Add : Bond interest expense Less: Bond interest payable, at end Add: Discount on bonds, at end Less: Discount on bonds, at beg Payment for Bond interest Payment to supplier Accounts payable, at beg Add: cost of goods sold Less:Accounts payable, at end Less : Inventory, at beg Add :Inventory, at end Payment to supplier -25 -65 37 -215 -46 28 222 232