Question

Presented below is a condensed version of the comparative balance sheets for Ravensclaw Corporation for the last two years at December 31.

2019 2018
Cash $230,100 $101,400
Accounts receivable 234,000 240,500
Investments 67,600 96,200
Equipment 387,400 312,000
Accumulated Depreciation-Equipment (137,800 ) (115,700 )
Current liabilities 174,200 196,300
Common stock 208,000 208,000
Retained earnings 399,100 230,100

Additional information:
Investments were sold at a loss of $13,000; no equipment was sold; cash dividends paid were $39,000; and net income was $208,000.

Required:
Create a Statement of Cash Flows for 2019.

Answer 1

Ravensclaw Corporation

Statement of Cash Flows for the year ended December 31, 2019:

Net income $208,000

Add non-cash expense:

Depreciation expense 22,100

Loss from sale of investment 13,000

Cash from operations $243,100

Adjustments of working capital:

Accounts receivable $6,500

Current liabilities -22,100

Net cash from operations $227,500

Investing activities:

Cash from investment sale 15,600

Equipment -75,400

Financing activities:

Cash dividends paid -39,000

Net cash flows $128,700

Step-by-step explanation:

a) Data and Calculations:

2019 2018 Differences

Cash $230,100 $101,400 +$128,700

Accounts receivable 234,000 240,500 -$6,500

Investments 67,600 96,200 -$28,600

Equipment 387,400 312,000 +$75,400

Accumulated Depreciation-

Equipment (137,800) (115,700) +$22,100 Depreciation Exp.

Current liabilities 174,200 196,300 -$22,100

Common stock 208,000 208,000 $0

Retained earnings 399,100 230,100 +$169,000

Cash dividends +$39,000

Net income = $208,000 ($169,000 + $39,000)

Cash from sold investments = $15,600 ($28,600 - $13,000)