Question

The comparative balance sheets of Larkspur Inc. at the beginning and the end of the year 2020 are as follows.

LARKSPUR INC. BALANCE SHEETS
		Dec. 31, 2020				Jan. 1, 2020				Inc./Dec.
Assets
Cash			$ 47,080				$ 15,080			$32,000	Inc.
Accounts receivable			95,260				90,180			5,080	Inc.
Equipment			43,260				24,180			19,080	Inc.
Less: Accumulated Depreciation-Equipment			21,260				11,000			10,260	Inc.
Total			$164,340				$118,440
Liabilities and Stockholders’ Equity
Accounts payable			$ 24,260				$ 17,180			7,080	Inc.
Common stock			102,080				82,180			19,900	Inc.
Retained earnings			38,000				19,080			18,920	Inc.
Total			$164,340				$118,440

Net income of $48,260 was reported, and dividends of $29,340 were paid in 2020. New equipment was purchased and none was sold.

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

Answer 1

LARKSPUR INC.
Statement of Cash Flows
For Year Ended 31st December, 2020
Cash flows from operating activities
Net income		$ 48,260.00
Adjustments:
Depreciation expense	$     10,260.00
Increase in accounts receivable	$    (5080.00)
Increase in accounts payable	$     7,080.00
		$ 12,260.00
Net cash provided by operating activities		$ 60,520.00
Cash flows from investing activities
Equipment purchased	$ (19,080.00)
Net cash used in investing activities		$(19,080.00)
Cash flows from financing activities
Dividends paid	$ (29,340.00)
Cash received from issue of stock	$ 19,900.00
Net cash used in financing activities		$ (9,440.00)
Net increase (decrease) in cash		$ 32,000.00
Opening Cash balance		$ 15,080.00
Closing Cash balance		$ 47,080.00