Question

A comparative statement of financial position for Blue Spruce Industries Inc. follows:

BLUE SPRUCE INDUSTRIES INC. Statement of Financial Position December 31, 2020
	December 31
Assets	2020			2019
Cash	$22,800			$35,800
Accounts receivable	122,000			55,600
Inventory	234,000			191,000
Land	77,000			125,000
Equipment	269,000			216,000
Accumulated depreciation—equipment	(70,300	)		(43,500	)
Total	$654,500			$579,900
Liabilities and Shareholders’ Equity
Accounts payable	$52,400			$59,500
Bonds payable	163,800			213,800
Common shares	233,000			183,000
Retained earnings	205,300			123,600
Total	$654,500			$579,900

Additional information:

1.		Net income for the fiscal year ending December 31, 2020, was $130,000.
2.		Cash dividends of $48,300 were declared and paid. Dividends paid are treated as financing activities.
3.		Bonds payable amounting to $50,000 were retired through issuance of common shares.
4.		Land was sold at a gain of $4,000.
5.		No equipment was sold during the year. Prepare a statement of cash flows using the indirect method.

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		130000
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	26800
Gain on Sale of Land	-4000
Increase in Accounts receivable	-66400
Increase in inventory	-43000
Decrease in accounts payable	-7100
		-93700
Net cash provided by operating activities		36300
Cash Flows from Investing Activities:
Purchase of Equipment	-53000		=216000-269000
Sale of Land	52000		=(125000-77000)+4000
Net Cash used by Investing Activities		-1000
Cash Flows from Financing Activities
Payment of Cash Dividends		-48300
Net Decrease in Cash		-13000
Cash at Beginning of Period		35800
Cash at End of Period		22800
Noncash Investing and Financing Activities
Issued Common stock to retire $50000 of bonds outstanding