Question

Ayayai Corp.’s statement of financial position at the end of 2019 included the following items:

Current assets		$1,115,000			Current liabilities		$1,027,100
Land		30,100			Bonds payable		1,111,000
Buildings		1,130,000			Common shares		181,000
Equipment		321,000			Retained earnings		175,000
Accumulated depreciation—buildings		(131,000	)
Accumulated depreciation—equipment		(11,100	)
Intangible assets—patents		40,100
Total		$2,494,100			Total		$2,494,100

The following information is available for the 2020 fiscal year:

1.		Net income was $392,000.
2.		Equipment (cost of $20,100 and accumulated depreciation of $8,010) was sold for $10,100.
3.		Depreciation expense was $4,010 on the building and $9,010 on equipment.
4.		Amortization expense on a patent was $3,010.
5.		Current assets other than cash increased by $30,000. Current liabilities increased by $14,000.
6.		An addition to a building was completed at a cost of $31,100.
7.		An FV-OCI investment in shares was purchased for $20,600 on the last day of the year. This was the first such investment made by Ayayai in its history.
8.		Bonds payable of $75,100 were issued at par.
9.		Cash dividends of $181,000 were declared and paid. Dividends paid are treated as financing activities.

Prepare a statement of financial position (SFP) as at December 31, 2020. (Hint: You will need to adjust (“plug”) the December 31, 2020 amount of current assets to ensure the SFP balances.) (List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

2.repare a statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer-

Part 1

Ayayai Corporation Statement of Financial Position December 31, 2019
Assets
Current assets			1,391,520
FV – OCI Investments			20,600
Property, plant, and equipment
Land		30,100
Buildings (1,130,000+31.100)	1,161,100
Less accumulated depreciation (131,000+4,010)	(135,010)	1,026,090
Equipment (321,000-20,100)	300,900
Less accumulated depreciation (11,100-8,010+9010)	(12,100)	288,800
Total			1,344,990
Intangible assets - Patents, net (40,100-3010)			37,090
Total assets			$2,794,200
Liabilities and Shareholders’ Equity
Current liabilities (1,027,100+14,000)			1,041,100
Long-term liabilities
Bonds payable (1,111,000+75,100)			1,186,100
Total liabilities			2,227,200
Shareholders’ equity
Common shares		181,000
Retained earnings (175,000+392,000-181,000)		386,000
Total shareholders’ equity			567,000
Total liabilities and shareholders’ equity			$2,794,200

Part 2

Ayayai Corporation Statement of Cash Flows For the Year Ended December 31, 2019
Cash flows from operating activities
Net income		392,000
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on sale of equipment (20,100-8,010-10,100)	1990
Depreciation expense	13,020
Patent amortization expense	3,010
Increase in current liabilities	14,000
Increase in current assets (other than cash)	(30,000)	2,020
Net cash provided by operating activities		394,020
Cash flows from investing activities
Proceeds from sale of equipment	10,100
Addition to building	(31,100)
Purchase of FV- OCI investments	(20,600)
Net cash used by investing activities		(41,600)
Cash flows from financing activities
Issuance of bonds	75,100
Payment of dividends	(181,000)
Net cash used by financing activities		(105,900)
Net increase in cash		$246,520

Working Note:-

Total Current Asset- End of the period	$1,391,520
Total Current Asset- Beginning of the period	$1,115,000
Increase in Current Asset During the year	$276,520
Increase in Current Asset other than Cash	$30,000
Increase in Cash during the year	$246,520

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