Question

A comparative statement of financial position for Nathalina Industries Inc. follows:
NATHALINA INDUSTRIES INC.
Statement of Financial Position
December 31, 2020
    December 31

Assets 2020 2019
Cash $ 21,000  $ 34,000 
Accounts receivable   114,000  54,000 
Inventory 220,000  189,000 
Land 71,000  110,000 
Equipment 240,000  200,000 
Accumulated depreciation—equipment   (69,000) (42,000)
Total $597,000     $545,000 
Liabilities and Shareholders' Equity        
Accounts payable. 52,000. 59,000

Long term liabilities 25,000 0

Bonds payable 125,000  200,000 
Common shares    204,000  164,000 
Retained earnings   191,000  122,000 
Total $597,000  $545,000 

Additional information:
1. Net income for the fiscal year ending December 31, 2020, was $129,000.
2. Cash dividends were declared and paid in the year.
3. Bonds payable amounting to $75,000 were paid off.
4. Additional issuance of common shares for cash occurred in the year.
5. Land was sold for cash at a gain of $5,000. This gain on sale of the land is listed on the income statement.
6. Equipment was purchased during the year. It was purchased with $25,000 Long term liabilities and the remaining was paid with cash.
7. Depreciation Expense during 2020 was $27,000.

Required: Prepare a statement of cash flows for 2020 using the indirect method.

Answer 1

Cash Flow Statement (Indirect Method)
Particulars	Amount	Amount
Net Income		$   1,29,000.00
Adjustments to reconcile net income to:
Net cash provided by operating activities
Gain on sale of Land	$       (5,000.00)
Depreciation	$      27,000.00
Increase in Accounts Receivable	$    (60,000.00)
Increase in Inventory	$    (31,000.00)
Decrease in Accounts Payable	$       (7,000.00)
Net Cash Generated		$    (76,000.00)
Net cash provided by operating activities	(A)	$      53,000.00
Cash Flows from Investing Activities
Sale of Land	$      44,000.00
Purchase of Equipment	$    (15,000.00)
Net cash provided by investing activities	(B)	$      29,000.00
Cash Flows from Financing Activities
Dividend Paid (W.N)	$    (60,000.00)
Bonds Payable paid off	$    (75,000.00)
Increase in Common Stock	$      40,000.00
Net cash provided by Financing activities	(C')	$    (95,000.00)
Net increase/decrease in cash	(A+B+C')	$    (13,000.00)
Add: Beginning cash balance		$      34,000.00
Ending cash balance		$      21,000.00

W.N
Retained Earnings
Dividend	$    60,000.00	Beg. Bal.	$ 1,22,000.00
End. Bal.	$ 1,91,000.00	Net Income	$ 1,29,000.00
	$ 2,51,000.00		$ 2,51,000.00