Question

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

Current assets (Cash $82,000)		$236,440			Current liabilities		$151,440
Land		31,130			Bonds payable		101,440
Buildings		121,440			Common stock		181,130
Equipment		91,130			Retained earnings		45,130
Accum. depr.-buildings		(31,440	)		Total		$479,140
Accum. depr.-equipment		(11,000	)
Patents		41,440
Total		$479,140

The following information is available for 2020.

1.		Net income was $57,680.
2.		Equipment (cost $21,440 and accumulated depreciation $9,440) was sold for $11,440.
3.		Depreciation expense was $5,440 on the building and $10,440 on equipment.
4.		Patent amortization was $2,500.
5.		Current assets other than cash increased by $29,000. Current liabilities increased by $14,440.
6.		An addition to the building was completed at a cost of $28,440.
7.		A long-term investment in stock was purchased for $16,000.
8.		Bonds payable of $51,130 were issued.
9.		Cash dividends of $30,000 were declared and paid.
10.		Treasury stock was purchased at a cost of $11,000.

a. Prepare a statement of cash flows for 2020.

b.Prepare a balance sheet at December 31, 2020.

Answer 1

Ayayai Corporation’s

statement of cash flows

For the Year Ended December 31, 2020

Cash flow from operating activities
Net Income		57,680
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation Expense	15880
Increase in current liabilities	14,440
Loss on Sale of Equipment	560		(21,440 -9,440-11,440)
Patent Amortization	2,500
Increase in current assets (other than cash)	(29,000)	4380
Net cash provided by operating activities		62,060
Cash flows from investing activities
Sale of Equipment	11,440
Addition to Building	(28,440)
Investment in Stock	(16,000)
Net cash used by investing activities		(33,000)
Cash flows from financing activities
Issuance of Bonds	51,130
Payment of Dividends	(30,000)
Purchase of Treasury stock	(11,000)
Net Cash Provided by Financing activities		10,130
Net Increase in Cash		39,190
Cash Balance at Beginning of the year		82,000
Cash Balance at end of the year		$121,190

Ayayai Corporation’s

balance sheet

As on December 31, 2020

ASSETS
Current Assets		304630	236,440+29,000+39,190
Long Term Investments		16,000
Property, Plant and Equipment
Land	31,130
Building	149880
Less : Accumulated Depreciation	-36880
Equipment	69690
Less : Accumulated Depreciation	-12000
Total		201820
Intangible Assets - Patents		38940
Total Assets		561,390
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities		165880
Long Term Liabilities
Bonds Payable		152570
Total Liabilities		318450
Stockholders Equity
Common Stock		181,130
Retained Earnings		72810
Total		253940
Less : Cost of Treasury stock		11000
Total Stockholders Equity		242940
Total Liabilities and stockholders Equity		561,390