Question

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

SPLISH COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
		2020			2019
Cash		$1,780			$1,170
Receivables		1,760			1,280
Inventory		1,620			1,880
Plant assets		1,910			1,670
Accumulated depreciation		(1,210	)		(1,160	)
Long-term investments (held-to-maturity)		1,330			1,440
		$7,190			$6,280
Accounts payable		$1,230			$920
Accrued liabilities		210			250
Bonds payable		1,370			1,560
Common stock		1,920			1,680
Retained earnings		2,460			1,870
		$7,190			$6,280

SPLISH COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$6,820
Cost of goods sold		4,600
Gross margin		2,220
Selling and administrative expenses		910
Income from operations		1,310
Other revenues and gains
Gain on sale of investments		80
Income before tax		1,390
Income tax expense		540
Net income		850
Cash dividends		260
Income retained in business		$590

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

Depreciation expense = Ending accumulated depreciation - Beginning accumulated depreciation
Depreciation expense = $1,210 - $1,160
Depreciation expense = $50

Cost of investments sold = Beginning long-term investments - Ending long-term investments
Cost of investments sold = $1,440 - $1,330
Cost of investments sold = $110

Proceed from sale of investments = Cost of investments sold + Gain on sale of investments
Proceed from sale of investments = $110 + $80
Proceed from sale of investments = $190

Cash purchase of plant assets = Ending plant assets - Beginning plant assets - Purchase of plant assets by issuing common stock
Cash purchase of plant assets = $1,910 - $1,670 - $70
Cash purchase of plant assets = $170

Repayment of bonds payable = Beginning bonds payable - Ending bonds payable
Repayment of bonds payable = $1,560 - $1,370
Repayment of bonds payable = $190

Cash issue of common stock = Ending common stock - Beginning common stock - Issue of common stock for purchase of plant assets
Cash issue of common stock = $1,920 - $1,680 - $70
Cash issue of common stock = $170