Question

Concord Corporation’s balance sheet at the end of 2019 included the following items. Current assets (Cash $82,000) $236,770 Current liabilities $151,770 Land 32,190 Bonds payable 101,770 Buildings 121,770 Common stock 182,190 Equipment 92,190 Retained earnings 46,190 Accum. depr.-buildings (31,770 ) Total $481,920 Accum. depr.-equipment (11,000 ) Patents 41,770 Total $481,920 The following information is available for 2020. 1. Net income was $60,100. 2. Equipment (cost $21,770 and accumulated depreciation $9,770) was sold for $11,770. 3. Depreciation expense was $5,770 on the building and $10,770 on equipment. 4. Patent amortization was $2,500. 5. Current assets other than cash increased by $29,000. Current liabilities increased by $14,770. 6. An addition to the building was completed at a cost of $28,770. 7. A long-term investment in stock was purchased for $16,000. 8. Bonds payable of $52,190 were issued. 9. Cash dividends of $30,000 were declared and paid. 10. Treasury stock was purchased at a cost of $11,000.Collapse question part(a)Prepare a statement of cash flows for 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Cash flow generated for the year: 71,790

Step-by-step explanation:

From the information given we use the indirect method, we adjust net income for the non-monetary terms and then, adjust for the changes in working capital

The sale of assets will be enter under investing activities for the cash received regardless of the gain/loss at disposal

the stock transactions are considered financing from the firms perspective.

Operating Activities:

Net income 60,100

depreciation 16,540

loss at disposal 230

(21,770 - 9,770 = 12,000 against 11,770)

amortization 2,500

adjusted income: 79,370

changes in working capital:

increase in current assets: (29,000)

increase in current liabilities: 14,770

net change in working capital 14,230

from operating activities: 93,600

Investing Activities

sale of equipment 11 ,770

purchase of stocks (16,000)

Building improvements (28,770)

from investing activities (33,000)

Financing Activities

Issuance of bonds payable 52, 190

Cash dividends (30,000)

Purchase of treasury Stocks (11, 000)

from financing activities 11, 190

Cash flow generated for the year:

93,600 - 33,000 + 11,190 = 71,790