Question

BRAND purchased equipment for $290,000 cash, sold equipment costing $150,000 with a book value of $100,000, and declared and paid dividends during 2021. No new notes payable were issued during the year.

Financial data follows.  All balances are normal.  

Balance Sheet	Dec. 31, 2021	Dec. 31, 2020	Change
Cash	$  36,000	$29,000	$  7,000
Accounts receivable	125,000	97,000	28,000
Inventory	100,000	114,000	(14,000)
Equipment	740,000	600,000	140,000
Accum. depreciation	370,000	220,000	150,000
Accounts payable	170,000	150,000	20,000
Unearned revenue	74,000	44,000	30,000
Accrued salaries	25,000	40,000	(15,000)
Taxes payable	9,000	8,000	1,000
Long-term notes payable	50,000	138,000	(88,000)
Common stock	215,000	200,000	15,000
Retained earnings	88,000	40,000	48,000

Income Statement	2021
Sales revenue		$2,800,000
Cost of sales		1,600,000
Salaries expense		900,000
Depreciation expense		200,000
Interest expense		20,000
Gain on sale of equipment		10,000
Income tax expense		25,000
Net income		$   65,000

Prepare BRANDS Statement of Cash Flows for 2021, using the indirect method.

Cash Flows from Operating Activities (CFO) =

Cash Flows from Investing Activities (CFI) =

Cash Flows from Financing Activities (CFF) =

Net increase/decrease in Cash =

When entering answers, enter them as whole numbers

Answer 1

Statement of Cash Flows - Indirect Approach
	Amount in $	Amount in $
Net Cash flows from operating activities
Net income		$           65,000
Adjustments for reconcile the net income to:
Depreciation Expenses	$           2,00,000
Gain on Sale of equipment	$             -10,000
Account receivable Increases	$             -28,000
Inventory Decreases	$              14,000
Increase in unearned revenue	$              30,000
Account payable Increases	$              20,000
Decrease in accrued salaries	$             -15,000
Increase in income tax payable	$                 1,000
		$       2,12,000
Net cash from operating activities		$       2,77,000
Cash flows from investing activities
Sale of Equipment	$           1,10,000
Purchase of Equipment	$         -2,90,000
Net cash used in investing activities		$     -1,80,000
Cash flows from Financing activities
Repayment of Long term notes Payable	$             -88,000
Issuance of Common Stock	$              15,000
Payment of Dividednds	$             -17,000
Net cash used in financing activities		$         -90,000
Net increase in cash and cash equivalents		$             7,000
Add :Cash and cash equivalents at beginning of period		$      29,000
Cash and cash equivalents at end of period		$           36,000
Calculation of dividend Paid :
Beginning balance of retaiend Earnings	$              40,000
Add: Net Profit of the year	$              65,000
Total	$           1,05,000
Less: Ending balance of retained earnings	$              88,000
Dividend Paid in cash	$              17,000