Answer:
Step-by-step explanation:
Given Data:
December 31
2019 2020
Cash $38,000 $65,500
Accounts receivable (net) 84,000 144,000
Inventory 169,000 205,000
Land 57,000 19,000
Equipment 505,000 787,000
TOTAL $853,000 $1,220,500
Accumulated depreciation $86,000 $117,000
Accounts payable 51,000 87,000
Notes payable - short-term 66,000 30,000
Notes payable - long-term 169,000 300,000
Common stock 415,000 483,000
Retained earnings 66,000 203,500
TOTAL $853,000 $1,220,500
Additional data for 2020:
1. Net income was $219,000.
2. Depreciation was $31,000.
3. Land was sold at its original cost.
4. Dividends of $81,500 were paid.
5. Equipment was purchased for $83,000 cash.
6. A long-term note for $199,000 was used to pay for an equipment purchase.
7. Common stock was issued to pay a $68,000 long-term note payable.
Statement of cash flows
For the year ending December, 2020
Cash flows from operating activities:
Net income $219,000
Adjustments to reconcile net income to
net cash flows from operating activities:
Add:
Depreciation expenses $31,000
Increase in account payable (87,000-51,000) $36,000
Less:
Increase in account receivable(84,000-144,000) -$60000
Increase in inventory (169,000 - 205,000) -$36000
Decrease in note payable-long term $0
(300,000- 169,000 - $199,000 + $68,000)
Decrease in note payable- short term -$36,000
(30,000 -66,000)
Net cash flow from operating activities -$65,000
---------------------------------------------------------------------------------- 154,000
Cash flow from investing activities:
Land sold ( 57,000- 19,000) $38,000
Equipment purchase -$83,000 -$45000
Cash flow from financing activities:
Dividend paid -$81,500
Net increase in cash $27,500
Add: Beginning cash balance $38,000
Ending cash balance $65,500