Question

Flounder Corporation’s balance sheet at the end of 2019 included the following items.

Current assets (Cash $82,000)		$236,160			Current liabilities		$151,160
Land		31,250			Bonds payable		101,160
Buildings		121,160			Common stock		181,250
Equipment		91,250			Retained earnings		45,250
Accum. depr.-buildings		(31,160	)		Total		$478,820
Accum. depr.-equipment		(11,000	)
Patents		41,160
Total		$478,820

The following information is available for 2020.

1.		Net income was $57,090.
2.		Equipment (cost $21,160 and accumulated depreciation $9,160) was sold for $11,160.
3.		Depreciation expense was $5,160 on the building and $10,160 on equipment.
4.		Patent amortization was $2,500.
5.		Current assets other than cash increased by $29,000. Current liabilities increased by $14,160.
6.		An addition to the building was completed at a cost of $28,160.
7.		A long-term investment in stock was purchased for $16,000.
8.		Bonds payable of $51,250 were issued.
9.		Cash dividends of $30,000 were declared and paid.
10.		Treasury stock was purchased at a cost of $11,000.

Prepare a statement of cash flows for 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Prepare a balance sheet at December 31, 2020. (Show only totals for current assets and current liabilities.) (List Property, Plant and Equipment in order of Land, Building and Equipment.)

Answer 1

Statement of Cash Flows

Particulars	$	$
Cash from operating activities
Net income		$57,090
Adjustments
Loss on sale of equipment	840
Depreciation on equipment	5160
Depreciation on building	10,160
Increase in CA	(29000)
Increase in CL	14160	1320
Net CF from Operating activities		58410
Cash flow from investing activities
Purchase of building	(28,160)
Purchase of LT Investment	(16000)
Sale of equipment	11,160
Net CF from investing activities		(33000)
CF from financing activities
Issuance of bonds payable	51250
Purchase of treasury stock	(11000)
Dividends paid	(30,000)
Net CF from financing activities		10250
Change in cash		35,660
Add opening cash balance		82000
Closing cash balance		117660

2. Balance sheet as at 31 Dec, 2020

Assets
Current Assets(117660+183160)	300820
LT Investments	16000
Property plant and equipment
Land	31250
Building(90,000-5160+28160)	113000
Equipment (80250-10160-12000)	58090
Total of PPE	202340
Intangibles patents(41160-2500)	38660
Total Assets	557820
Liabilities
Current Liabilities (151160+14160)	165320
Bonds payable (101160+51250)	152410
Total liabilities	317730
SH equity common stock (181250-11000)	170250
Retained earnings (45250+57090-30000-2500)	69840
Total liabilities	557820