Question

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:

		Dec. 31, 20Y6		Dec. 31, 20Y5
Assets
Cash		$281,360		$261,130
Accounts receivable (net)		101,930		93,780
Inventories		287,720		277,670
Investments		0		107,580
Land		147,580		0
Equipment		317,460		245,500
Accumulated depreciation-equipment		(74,320)		(66,200)
	Total assets	$1,061,730		$919,460
Liabilities and Stockholders' Equity
Accounts payable		$192,170		$181,130
Accrued expenses payable		19,110		23,910
Dividends payable		10,620		8,280
Common stock, $10 par		57,330		45,050
Paid-in capital: Excess of issue price over par-common stock		215,530		125,050
Retained earnings		566,970		536,040
	Total liabilities and stockholders’ equity	$1,061,730		$919,460

The income statement for the year ended December 31, 20Y6, is as follows:

Sales					$1,640,080
Cost of merchandise sold					675,300
Gross profit					$964,780
Operating expenses:
	Depreciation expense		$8,120
	Other operating expenses		851,680
		Total operating expenses			859,800
Operating income					$104,980
Other expense:
		Loss on sale of investments			(29,050)
Income before income tax					$75,930
Income tax expense					24,300
Net income					51,630

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

Equipment and land were acquired for cash.

There were no disposals of equipment during the year.

The investments were sold for $78,530 cash.

The common stock was issued for cash.

There was a $20,700 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Canace Products Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y6
Cash flows from operating activities:
	$
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
	$
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
	$
Net cash flow from financing activities
		$
Cash at the beginning of the year
Cash at the end of the year		$

Answer 1

Canace Products Inc.
Cash Flow Statement
For the Year Ended December 31, 20Y6
A. Cash Flows from Operating Activity
Net Income		$        51,630.00
Adjustments
Depreciation expense	$       8,120.00
Loss on sale of Investment	$     29,050.00
Increase in Accounts receivables	$     (8,150.00)
Increase in Inventories	$   (10,050.00)
Increase in Accounts Payable	$    11,040.00
Decrease In accrued Expenses	$     (4,800.00)
		$        25,210.00
Net cash flow from Operating activities		$        76,840.00
B. Cash flows from Investing Activities
Purchase of Land	$(147,580.00)
Sale of Investment	$     78,530.00
Purchase of Equipment	$   (71,960.00)
Cash flows from (used for) financing activities:		$   (141,010.00)
C. Cash Flows from Financing activities
Issuance of Common Stock	$   102,760.00
payments of dividends	$   (18,360.00)
Cash flows from Financing activities		$        84,400.00
Net Increase (Decrease) in Cash [A+B+C]		$        20,230.00
Cash at the beginning		$      261,130.00
Cash at the end		$      281,360.00

Dividend paid = Dividend declared – Increase in dividend payable

Dividend paid =$20700-$2340=$18,360