In: Finance
Statement of Cash Flows (Indirect Method)
Arctic Company’s income statement and comparative balance sheets
follow.
ARCTIC COMPANY | ||
---|---|---|
Income Statement | ||
For Year Ended December 31, 2019 | ||
Sales | $728,000 | |
Cost of goods sold | $534,000 | |
Wages expense | 190,000 | |
Advertising expense | 31,000 | |
Depreciation expense | 22,000 | |
Interest expense | 18,000 | |
Gain on sale of land | (25,000) | 770,000 |
Net loss | $(42,000) |
ARCTIC COMPANY | ||
---|---|---|
Balance Sheet | ||
Dec. 31, 2019 | Dec. 31, 2018 | |
Assets | ||
Cash | $49,000 | $28,000 |
Accounts receivable | 42,000 | 50,000 |
Inventory | 107,000 | 113,000 |
Prepaid advertising | 10,000 | 13,000 |
PPE | 360,000 | 222,000 |
Accumulated depreciation | (78,000) | (56,000) |
Total assets | $490,000 | $370,000 |
Liabilities and Stockholders' Equity | ||
Accounts payable | $17,000 | $31,000 |
Interest payable | 6,000 | - |
Bonds payable | 200,000 | - |
Common stock | 245,000 | 245,000 |
Retained earnings | 52,000 | 94,000 |
Treasury stock | (30,000) | - |
Total liabilities and equity | $490,000 | $370,000 |
During 2019, Arctic sold land for $70,000 cash that had
originally cost $45,000. Arctic also purchased equipment for cash,
acquired treasury stock for cash, and issued bonds payable for cash
in 2019. Accounts payable relate to merchandise purchases.
Required
a. Compute the change in cash that occurred during 2019.
Note: Do not use a negative sign with your
answer.
$Answer
AnswerIncrease in cashDecrease in cashNeither an increase or
decrease in cash
b. Prepare a 2019 statement of cash flows using the direct
method.
Note: Use a negative sign to indicate a cash
outflow.
Arctic Company | ||
---|---|---|
Statement of Cash Flows | ||
For Year Ended December 31, 2019 | ||
Operating Activities | ||
Cash Received from Customers | Answer | |
Cash Paid for Merchandise Purchased | Answer | |
Cash Paid to Employees | Answer | |
Cash Paid for Advertising | Answer | |
Cash Paid for Interest | Answer | |
Net Cash Used by Operating Activities | Answer | |
Investing Activities | ||
AnswerAccumulated Depreciation increaseGain on Sale of LandIssuance of Common StockLoss on Sale of LandNet incomeNet lossPurchase of Treasury StockRetained Earnings DecreaseSale of LandSale of Treasury StockN/A | Answer | |
Purchase of Equipment | Answer | |
AnswerNet Cash Provided by Operating ActivitiesNet Cash Used by Operating ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Used by Financing Activities | Answer | |
Financing Activities | ||
Issuance of Bonds Payable | Answer | |
AnswerAccumulated Depreciation increaseGain on Sale of LandIssuance of Common StockLoss on Sale of LandNet incomeNet lossPurchase of Treasury StockRetained Earnings DecreaseSale of LandSale of Treasury StockN/A | Answer | |
AnswerNet Cash Provided by Operating ActivitiesNet Cash Used by Operating ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Used by Financing Activities | Answer | |
Net Increase in Cash | Answer | |
Cash at Beginning of Year | Answer | |
Cash at End of Year | Answer |