Question

Here are comparative balance sheets for Velo Company.

Velo Company Comparative Balance Sheets December 31
Assets		2020			2019
Cash		$73,400			$33,100
Accounts receivable		85,800			71,200
Inventory		170,200			187,000
Land		72,800			101,000
Equipment		260,600			200,800
Accumulated depreciation—equipment		(66,100	)		(33,900	)
Total		$596,700			$559,200
Liabilities and Stockholders’ Equity
Accounts payable		$35,000			$47,500
Bonds payable		151,400			203,400
Common stock ($1 par)		217,600			174,100
Retained earnings		192,700			134,200
Total		$596,700			$559,200

Additional information:

1.		Net income for 2020 was $103,600.
2.		Cash dividends of $45,100 were declared and paid.
3.		Bonds payable amounting to $52,000 were redeemed for cash $52,000.
4.		Common stock was issued for $43,500 cash.
5.		No equipment was sold during 2020, but land was sold at cost.

Prepare a statement of cash flows for 2020 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).)

Velo Company Statement of Cash Flows

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		103600
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	32200
Increase in Accounts receivable	-14600
Decrease in inventory	16800
Decrease in accounts payable	-12500
		21900
Net cash provided by operating activities		125500
Cash Flows from Investing Activities:
Purchase of Equipment	-59800
Sale of Land	28200
Net Cash used by Investing Activities		-31600
Cash Flows from Financing Activities
Payment of Cash Dividends	-45100
Redemption of Bonds	-52000
Issuance of Common Stock	43500
Net Cash Used by Financing Activities		-53600
Net Increase in Cash		40300
Cash at Beginning of Period		33100
Cash at End of Period		73400