Question

Condensed financial data of Cheng Inc. follow.

CHENG INC. Comparative Balance Sheets December 31
Assets		2020			2019
Cash		$104,300			$48,600
Accounts receivable		92,100			33,700
Inventory		111,500			102,000
Prepaid expenses		29,500			25,200
Investments		139,500			113,100
Equipment		264,100			241,000
Accumulated depreciation-equipment		(46,800	)		(52,300	)
Total		$694,200			$511,300
Liabilities and Stockholders’ Equity
Accounts payable		$111,700			$67,800
Accrued expenses payable		16,100			17,000
Bonds payable		113,100			149,900
Common stock		219,500			174,200
Retained earnings		233,800			102,400
Total		$694,200			$511,300

CHENG INC. Income Statement For the Year Ended December 31, 2020
Sales revenue				$391,900
Less:
Cost of goods sold		$134,000
Operating expenses, excluding depreciation		12,700
Depreciation expense		30,300
Income tax expense		26,300
Interest expense		4,500
Loss on disposal of plant assets		7,500		215,300
Net income				$176,600

Additional information:

1.		New equipment costing $79,300 was purchased for cash during the year.
2.		Old equipment having an original cost of $56,200 was sold for $12,900 cash.
3.		Bonds matured and were paid off at face value for cash.
4.		A cash dividend of $45,200 was declared and paid during the year.

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

Cash Flow Statement (Indirect Method)
Particulars	Amount	Amount
Net Income		$   1,76,600.00
Adjustments to reconcile net income to:
Net cash provided by operating activities
Depreciation	$      30,300.00
Loss on sale of Equipment	$        7,500.00
Increase in Accounts Receivable	$    -58,400.00
Increase in Inventory	$       -9,500.00
Increase in Prepaid Expenses	$       -4,300.00
Increase in Accounts Payable	$      43,900.00
Decrease in Accrued Expenses	$          -900.00
Net Cash Generated		$        8,600.00
Net cash provided by operating activities	(A)	$   1,85,200.00
Cash Flows from Investing Activities
Purchase of Investment	$    -26,400.00
Purchase of Equipment	$    -79,300.00
Sale of Equipment	$      12,900.00
Net cash provided by investing activities	(B)	$    -92,800.00
Cash Flows from Financing Activities
Payment of Bonds Payable	$    -36,800.00
Dividend Paid	$    -45,200.00
Issuance of Stock	$      45,300.00
Net cash provided by Financing activities	(C')	$    -36,700.00
Net increase/decrease in cash	(A+B+C')	$      55,700.00
Add:Opening cash balance		$      48,600.00
Closing cash balance		$   1,04,300.00

Workings:

Equipment
Beg. Bal.	$ 2,41,000.00	Disposal	$    56,200.00
Cash	$    79,300.00	End. Bal.	$ 2,64,100.00
	$ 3,20,300.00		$ 3,20,300.00
Accumulated Depreciation
Disposal	$    35,800.00	Beg. Bal.	$    52,300.00
End. Bal.	$    46,800.00	Depreciation	$    30,300.00
	$    82,600.00		$    82,600.00
Disposal
Equipment	$    56,200.00	Accu. Dep.	$    35,800.00
		Loss	$      7,500.00
	$                  -	Cash	$    12,900.00
	$    56,200.00		$    56,200.00
Investment
Beg. Bal	$ 1,13,100.00
Cash	$    26,400.00	End. Bal.	$ 1,39,500.00
	$ 1,39,500.00		$ 1,39,500.00

Hey, it took a lot of efforts to solve this one, so if you find anything incorrect, please let me know before downvoting it, will rectify the same. Thank you