Question

Exercise 23-11

Condensed financial data of Culver Company for 2020 and 2019 are presented below.

CULVER COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
		2020			2019
Cash		$1,770			$1,170
Receivables		1,790			1,320
Inventory		1,610			1,940
Plant assets		1,910			1,680
Accumulated depreciation		(1,200	)		(1,190	)
Long-term investments (held-to-maturity)		1,300			1,420
		$7,180			$6,340
Accounts payable		$1,210			$910
Accrued liabilities		200			240
Bonds payable		1,370			1,560
Common stock		1,880			1,740
Retained earnings		2,520			1,890
		$7,180			$6,340

CULVER COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$7,010
Cost of goods sold		4,730
Gross margin		2,280
Selling and administrative expenses		930
Income from operations		1,350
Other revenues and gains
Gain on sale of investments		80
Income before tax		1,430
Income tax expense		540
Net income		890
Cash dividends		260
Income retained in business		$630

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows 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

Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		890
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	10
Gain on Sale of investments	-80
Increase in receivables	-470
Decrease in inventory	330
Increase in accounts payable	300
Decrease in accrued liabilities	-40
		50
Net cash provided by operating activities		940
Cash Flows from Investing Activities:
Purchase of Plant Assets	-160
Sale of Held-to-Maturity Investments	200
Net Cash Provided by Investing Activities		40
Cash Flows from Financing Activities
Payment of Cash Dividends	-260
Redemption of Bonds Payable	-190
Issuance of Common Stock	70
Net Cash Used by Financing Activities		-380
Net Increase in Cash		600
Cash at Beginning of Period		1170
Cash at End of Period		1770
Noncash Investing and Financing Activities
Issuance of Common Stock for Plant Assets		70