Question

The following informations relates to Bocca, Inc. for 2019.
1. Cash balance 1-1-20	19,000
2. Cash balance 12-31-20	61,000
3. Increase in Accounts Receivable	16,000
4. Decrease in Inventory	4,000
5. Net income for 2020	125,000
6. Sale of land	28,000
7. Purchase of equipment	59,000
8. Depreciation expense was $27,000	20,000
9. No gains or losses were recorded in 2020
10. Cash dividends declared and paid	60,000
11. Decrease in accounts payable	5,000
12. Bonds payable retired (paid)	50,000
13. Common stock issued	55,000
In the space below, prepare a Statement of Cash Flows for December 31, 2019:

Answer 1

statement of cash flow records changes in cash balance during the period. It is bifurcated into three parts (1) cash flow from operating activities (2) cash flow from financing activities (3) cash flow from investing activities

Bocca Inc Statement of cash flow for year ended 2020
Cash flow from operating activities
Net Income	$125,000
Adjustment
Depreciation	$20,000
Increase in accounts receivable	($16,000)
Decrease in Inventory	$4,000
Decrease in accounts payable	($5,000)
Cash flow from operating activities		$128,000
Cash flow from Investing activities
Purchase of equipment	($59,000)
sale of land	$28,000
Net cash used by Investing activities		($31,000)
Cash flow from financing activities
Cash dividends declared and paid	(60,000)
Bonds payable retired (paid)	(50,000)
Common stock issued	55,000
		($55,000)
Net change in cash		$42,000[$128,000-31,000-55,000]
Add Beginning cash balance		$19,000
Cash balance at the end of year		$61,000 [$42,000+19,000]

Increase in asset= decrease in cash

decrease in liability = decrease in cash

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