Question

A comparative statement of financial position for Flint Industries Inc. follows: FLINT INDUSTRIES INC. Statement of Financial Position December 31, 2020 December 31 Assets 2020 2019 Cash $22,100 $35,100 Accounts receivable 117,000 54,600 Inventory 226,000 198,000 Land 81,000 115,000 Equipment 279,000 217,000 Accumulated depreciation—equipment (71,000 ) (43,600 ) Total $654,100 $576,100 Liabilities and Shareholders’ Equity Accounts payable $53,300 $60,300 Bonds payable 174,300 220,300 Common shares 218,000 172,000 Retained earnings 208,500 123,500 Total $654,100 $576,100 Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $149,000. 2. Cash dividends of $64,000 were declared and paid. Dividends paid are treated as financing activities. 3. Bonds payable amounting to $46,000 were retired through issuance of common shares. 4. Land was sold at a gain of $5,000. 5. No equipment was sold during the year. (a) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

Answer

Amount ref 149,000 Statement of cash Flow Cash Flows from Operating Activities Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation Expense Gain on on sale of land Decrease in Accounts Payable Increase in Accounts Receivable Increase in Inventories Cash generated from operations Net Cash Provided by Operating Activities 27,400 (5,000) (7,000) (62,400) (28,000) W.N.2 Given Closing balance - Beginning Balance Closing balance - Beginning Balance Closing balance - Beginning Balance (75,000) 74,000 Cash Flows from Investing Activities Purchase of equipment Sale of Land Net Cash provided by (used in) Investing Activities (62,000) 39,000 W.N1 Given (23,000) (64,000) W.N3 Cash Flows from Financing Activities Payment of Dividends Net Cash provided by (used in) Financing Activities Net Increase/Decrease in Cash Cash Balance Jan 1 Cash Balance Dec 31 (64,000) (13,000) 35,100 22,100 Notes Non-cash investing and financing activities Bonds payable amounting to $46,000 were retired through issuance of common shares 46,000 217,000 W.N.1 Opening Equipment Sold Balance Purchase Closing Balance Cash Payment 217,000 62,000 279,000 (62,000) 43,600 27,400 71,000 W.N.2 Opening Acc Dep Dep for the year Acc Dep on Asset Sold Closing Acc Dep W.N3 Opening retained earnings Add: net Profit Less: Stock Dividend Less: Drawings / Dividend Closing Retained Earnings 123,500 149,000 (64,000) 208,500