Question

The following is a condensed version of the comparative balance sheets for Tamarisk Corporation for the last two years at December 31.

2020 2019
Cash $ 354,000 $ 156,000
Accounts receivable 360,000 370,000
Investments 104,000 148,000
Equipment 596,000 480,000
Accumulated Depreciation-Equipment (212,000 ) (178,000 )
Current liabilities 268,000 302,000
Common stock 320,000 320,000
Retained earnings 614,000 354,000
Additional information:
Investments were sold at a loss of $20,000; no equipment was sold; cash dividends paid were $60,000; and net income was $320,000.
Prepare a statement of cash flows for 2020 for Swifty Corporation. (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 Statement

Cash flow from Operating Activities

Net Income $296,000

Adjustments

Depreciation $34,000

(212,000- 178,000)

Loss on sale of Investments $20,000

Decrease in Accounts Receivable $10,000

(370,000 - 360,000)

Decrease in Current Liabilities -$34,000

(268,000 - 302,000)

Total Adjustments $30,000

Cash from operating activities $326,000

Cash flow from Investing Activities

Purchase of Equipment -$116,000

(480,000 - 596,000)

Sale of Investment $24,000

(148,000 - 104,000 -20,000)

Cash used in investing activities -$92,000

Cash flow from Financing Activities

Issue of shares $-

Dividend Paid -$60,000

Cash from financing activities -$60,000

Net Increase in cash $ 174,000

Opening Balance of Cash $156,000

Closing Balance of Cash $330,000