Question

Condensed financial data of Oakley Company appear below.

Oakley Company Comparative Balance Sheets December 31
Assets		2020			2019
Cash		$84,200			$47,000
Accounts receivable		91,200			56,800
Inventory		124,600			102,200
Investments		83,200			85,000
Equipment		256,000			204,000
Accumulated depreciation—equipment		(50,000	)		(40,000	)
		$589,200			$455,000
Liabilities and Stockholders’ Equity
Accounts payable		$58,400			$48,700
Accrued expenses payable		12,300			18,600
Bonds payable		101,000			71,000
Common stock		249,000			201,000
Retained earnings		168,500			115,700
		$589,200			$455,000

Oakley Company Income Statement For the Year Ended December 31, 2020
Sales revenue				$293,400
Gain on disposal of plant assets				8,000
				301,400
Less:
Cost of goods sold		$99,600
Operating expenses (excluding depreciation expense)		13,400
Depreciation expense		49,200
Income tax expense		7,200
Interest expense		2,800		172,200
Net income				$129,200

Additional information:

1.		Equipment costing $94,000 was purchased for cash during the year.
2.		Investments were sold at cost.
3.		Equipment costing $42,000 was sold for $10,800, resulting in gain of $8,000.
4.		A cash dividend of $76,400 was declared and paid during the year.

Prepare a worksheet for the statement of cash flows using the indirect method. Enter the reconciling items directly in the worksheet columns. (Show details of retained earnings and accumulated depreciation, do not net)

Answer 1

Solution

Oakley Company
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash flows from operating activities:
Net income		$   129,200.00
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of equipment	$    (8,000.00)
Depreciation expense	$   49,200.00
Incease in accounts receivables	$ (34,400.00)
Decrease in inventory	$ (22,400.00)
Increase in accounts payable	$     9,700.00
Decrease in Accrued expenses payable	$    (6,300.00)
	$    (6,730.00)	$    (12,200.00)
Net cash from Operating Activities		$   117,000.00
Cash flows from investing activities:
Purchase of Equipment	$ (94,000.00)
Sale of Equipment	$   10,800.00
Sale of Investment	$     1,800.00
Net cash from Investing Activities		$    (81,400.00)
Cash flows from financing activities:
Issue of bonds	$   30,000.00
Issue of Common stock	$   48,000.00
Dividends paid	$ (76,400.00)
Net cash from Financing Activities		$       1,600.00
Net change in cash during the year		$     37,200.00
Add: Beinning cash balance		$     47,000.00
Ending cash balance		$     84,200.00