Question

Condensed financial data of Oriole Company for 2020 and 2019 are presented below.

ORIOLE COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 Cash $1,810 Receivables 1,790 Inventory 1,570 Plant assets 1,870 Accumulated depreciation (1,230 ) Long-term investments (held-to-maturity) 1,300 $7,110 2019 $1,120 1,330 1,940 1,740 (1,150 ) 1,440 $6,420 Accounts payable Accrued liabilities Bonds payable Common stock Retained earnings $1,220 200 1,370 1,860 2,460 $7,110 $910 260 1,550 1,740 1,960 $6,420 ORIOLE COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Income from operations Other revenues and gains Gain on sale of investments Income before tax Income tax expense Net income Cash dividends $6,810 4,680 2,130 920 1,210 80 1,290 530 760 260 Income retained in business $500 Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

ORIOLE COMPANY

STATEMENT OF CASHFLOW

For the year ended on 31/12/2020

Cash flow from operating activities
Net Income	$500
Adjustment for:
Increase in receivables	$(460)
Decrease in inventory	$370
Increase in accounts payable	$310
Decrease in accrued liabilities	$(60)
Decrease in bonds payable	$(180)
Cash generated from operations		$480
Cash flows from investing activities
Purchase of plant assets	$(60)
Proceed from sale of long-term investments	$220
Cash generated from investing activities		$160
Cash flows from financing activities
Proceed from issue of common stock	$50
Cash generated from financing activities		$50
Net increase in cash and cash equivalents		$690
Cash and cash equivalents at begining of the period		$1120
Cash and cash equivalents at end of the period		$1810

Note:

1. No adjustment for accumulated depreciation because it is not adjusted in income statement.

2. Purchase of Plant asset is $130. Out of which $70 paid by issue of common stock and remaining $60 paid in cash.

3. Common Stock issued during the year is $120. $70 for purchase of plants and remaining common stock of $50 issued against cash.

4. Cost of investment sold during the year is $140 and gain on sale of investment is $80. Hence proceed from sale of investment is $220.