Question

Templar Inc. is currently preparing its financial statements for 2020 and is currently working on its cash flow statement. Templar's balance sheets for 2020 is as follows:

Templar Inc.
Balance Sheets for the Year Ended
	12/31/2020	12/31/2019
Assets
Cash	$ 44,000	$ 9,000
Accounts receivable	52,000	24,000
Inventory	27,000	40,000
Property, plant, and equipment, net of accumulated depreciation of $42,000 in 2020 and $34,000 in 2019)	133,000	73,000
Prepaid expenses	4,000	2,000
Total assets	$260,000	$148,000
Liabilities and shareholders' equity
Accounts payable	$ 25,000	$ 14,000
Interest payable	8,000	6,000
Income taxes payable	7,000	11,000
Short-term note payable	37,000	32,000
Bonds payable	75,000	50,000
Common stock, $10 par	75,000	25,000
Retained earnings	33,000	10,000
Total liabilities and shareholders' equity	$260,000	$148,000

In addition, during 2020, Templar:

• had net income of $31,000.
• sold land with a book value of $7,000 for a gain of $3,000.
• paid dividends of $8,000.
• issued common stock with a fair value of $50,000 in exchange for a building.
• purchased some equipment, but had no other activity related to property, plant and equipment besides the land sale and building purchase noted above (and depreciation).

Below, prepare Templar's 2020 full statement of cash flows, including all section headers and subtotals. (Don't worry about precise formatting; for each line, just put the text for that line followed by any amount necessary.) Use the indirect method for the operating cash flows section.

Answer 1

Cash flow from Operating activities
Net Income		31,000
Adjustments to reconcile:
Less: Gain on sale of land	(3,000)
Add: Depreciation (42,000 - 34,000)	8,000
Less: Increase in accounts receivable	(28,000)
Less: Increase in prepaid expenses	(2,000)
Add: Decrease in inventory	13,000
Add: Increase in accounts payable	11,000
Add: Increase in short term notes payable	5,000
Add: Increase in interest payable	2,000
Less: Decrease in tax payable	(4,000)	2,000
Net cash from operating activities		33,000
Cash flow from Investing activities,
Sale of land	10,000
Purchase of fixed assets [133,000 - (73,000 + 50,000 - 7,000 - 8,000 depreciation) ]	(25,000)	(15,000)
Cash flow from financing activities
Dividend paid	(8,000)
Issue of bonds (75,000 - 50,000)	25,000	17,000
Net increase in cash and cash equivalents		35,000
Add: Opening cash balance		9,000
Closing cash balance		44,000