Question

Presented below are the 2021 Income statement and comparative balance sheets for Santana Industries. $20,45€ SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2021 ($ in thousands) Sales revenue $ 15,650 Service revenue 4,880 Total revenue Operating expenses: Cost of goods sold 7.989 Selling expense 3.100 General and administrative expense 2.280 Total operating expenses Operating income Interest expense Income before income taxes Income tax expense Net income 13,200 7.250 220 7.30 2,3ee $ 4,730 Dec. 31. Dec. 31, 2821 2020 $ 9,000 3,900 5,480 220 15,988 (5,880) $28,620 $ 2,830 2,90€ 3,700 440 13,480 (5,280) $ 18,670 Balance Sheet Information ($ in thousands) Assets: Cash Accounts receivable Inventory Prepaid rent Equipment Less: Accumulated depreciation Total assets Liabilities and Shareholders' Equity: Accounts payable Interest payable Deferred revenue Income taxes payable Notes payable (due 12/31/2023) Connon stock Retained earnings Total liabilities and shareholders' equity $ 1,800 678 940 $ 2,888 178 940 620 6,480 10,700 6,990 $28,620 10,786 3,96€ $ 18,070 Additional Information for the 2021 fiscal year ($ in thousands): 1. Cash dividends of $1.700 were declared and pald. 2. Equipment costing $5.400 was purchased with cash. 3. Equipment with a book value of $1,200 (cost of $2900 less accumulated depreciation of $1,700) was sold for $1.200. 4. Depreciation of $2,300 is included in operating expenses. Required: Prepare Santana Industries' 2021 statement of cash flows, using the Indirect method to present cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

Answer 1

А B С 4 1 SANTANA INDUSTRIES 2 Statement of Cash Flows 3 For the Year Ended December 31, 2021 ($ in thousands) 5 Cash flows from operating activities: 6 Net Income $ 4,730 7 Adjustments for noncash effects: 8 Depreciation expense $ 2,300 9 Changes in operating assets and liabilities: 10 Increase in accounts receivable $ -1,000 11 Increase in inventory $ -1,700 12 Decrease in prepaid rent $ 220 13 Increase in accounts payable $ 1,000 14 Increase in interest payable $ 170 15 Increase in deferred service revenue $ 270 16 Decrease in income taxes payable $-320 17 Net Cash flows from operating activities 18 Cash flows from investing activities: 19 Purchase of equipment $ -5,400 20 Sale of equipment $ 1,200 21 Net Cash flows from investing activities 22 Cash flows from financing activities: 23 Issue of notes payable $ 6,400 24 Payment of dividends $ -1,700 25 Net Cash flows from financing activities 26 Net increase in cash 27 Cash, January 1 28 Cash, December 31 $ 5,670 $ -4,200 $ 4,700 $ 6,170 $ 2,830 $ 9,000

A B с 1 SANTANA INDUSTRIES 2 Statement of Cash Flows 3 For the Year Ended December 31, 2021 4 ($ in thousands) 5 Cash flows from operating activities: 6 Net Income 4730 7 Adjustments for noncash effects: 8 Depreciation expense 2300 9 Changes in operating assets and liabilities: 10 Increase in accounts receivable =2900-3900 11 Increase in inventory =3700-5400 12 Decrease in prepaid rent -440-220 13 Increase in accounts payable =2800-1800 14 Increase in interest payable =170-0 15 Increase in deferred service revenue =940-670 16 Decrease in income taxes payable =620-940 17 Net Cash flows from operating activities I=SUM(B6:B16) 18 Cash flows from investing activities: 19 Purchase of equipment -5400 20 Sale of equipment 1200 21 Net Cash flows from investing activities =+B19+B20 22 Cash flows from financing activities: 23 Issue of notes payable 6400 24 Payment of dividends - 1700 25 Net Cash flows from financing activities =+B23+B24 26 Net increase in cash =+C17+C21+C25 27 Cash, January 1 2830 28 Cash, December 31 =+C26+C27