Question

Pandemic Inc. provided the following comparative balance sheets for 2020 and 2019 and the 2020 income statement. Additional pertinent information is provided below.

- Fixed assets costing $8,000 with a book value of $3,000 were sold for $6,000.

- Long term investments costing $5,000 were sold for $5,000.

-Redeemed $5,000 of the bond issuance.

- Sold stock___________.

-Paid dividends_________.

All other transactions involved cash.

Be certain you have accounted for all the changes in the account line items somewhere in your 3 areas of SCF (ex. Fixed Assets account went from $28K to $40k - we did not just buy $12K this year....)

  2020     2019

Cash $30,000 $16,000

Acct Receivable 7,000                               5,000

Ppd Insurance 2,000 3,000

Inventory 13,000 11,000

L-T Investments 22,000                         27,000

Fixed Assets 40,000 28,000

Acc Depreciation 8,000                               6,000

Acct Payable 16,000                         14,000

Interest Payable 4,000                           ----000—

Taxes Payable 6,000 4,000

Bond Payable 20,000 25,000

Common Stock 21,000                         20,000

APIC 3,000                                      0

Retained Earnings 36,000                         21,000

Sales $120,000

-COGS   -   60,000

Gross Profit 60,000

- Operating Expenses   -   20,000  

Income from Operations 40,000

+/- Other

           Interest Expense -2,000

Gain on Sale of Equip +3,000        

Taxable Income 41,000

-Tax   -8,000

Net Income $33,000

Required: Prepare the Statement of Cash Flows for Operating, Investing and Financing using both the indirect and direct methods for Operating.

Answer 1