Question

Problem 23-01 Your answer is partially correct. Try again. The following are Marigold Corp.’s comparative balance sheet accounts at December 31, 2020 and 2019, with a column showing the increase (decrease) from 2019 to 2020. COMPARATIVE BALANCE SHEETS 2020 2019 Increase (Decrease) Cash $810,600 $701,400 $109,200 Accounts receivable 1,135,300 1,156,300 (21,000 ) Inventory 1,850,800 1,708,800 142,000 Property, plant, and equipment 3,318,800 2,955,300 363,500 Accumulated depreciation (1,164,400 ) (1,035,600 ) (128,800 ) Investment in Myers Co. 307,400 277,400 30,000 Loan receivable 248,800 — 248,800    Total assets $6,507,300 $5,763,600 $743,700 Accounts payable $1,015,700 $949,200 $66,500 Income taxes payable 30,200 50,000 (19,800 ) Dividends payable 79,500 100,400 (20,900 ) Lease liabililty 423,200 — 423,200 Common stock, $1 par 500,000 500,000 — Paid-in capital in excess of par—common stock 1,499,000 1,499,000 — Retained earnings 2,959,700 2,665,000 294,700    Total liabilities and stockholders’ equity $6,507,300 $5,763,600 $743,700 Additional information: 1. On December 31, 2019, Marigold acquired 25% of Myers Co.’s common stock for $277,400. On that date, the carrying value of Myers’s assets and liabilities, which approximated their fair values, was $1,109,600. Myers reported income of $120,000 for the year ended December 31, 2020. No dividend was paid on Myers’s common stock during the year. 2. During 2020, Marigold loaned $323,600 to TLC Co., an unrelated company. TLC made the first semiannual principal repayment of $74,800, plus interest at 10%, on December 31, 2020. 3. On January 2, 2020, Marigold sold equipment costing $59,700, with a carrying amount of $37,700, for $39,900 cash. 4. On December 31, 2020, Marigold entered into a capital lease for an office building. The present value of the annual rental payments is $423,200, which equals the fair value of the building. Marigold made the first rental payment of $60,000 when due on January 2, 2021. 5. Net income for 2020 was $374,200. 6. Marigold declared and paid the following cash dividends for 2020 and 2019. 2020 2019 Declared December 15, 2020 December 15, 2019 Paid February 28, 2021 February 28, 2020 Amount $79,500 $100,400 Prepare a statement of cash flows for Marigold Corp. for the year ended December 31, 2020, 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

MARIGOLD CORP.
Statement of Cashflow for the year ending Dec 31,2020
Cash flow from operating activities
Net income as per income statement	$374,200
Add:
Depreciation	$150,800
Less:
Profit on sale of equipment	($2,200)
Interest income	($16,180)
Net operating income	$506,620
Adjustments for
Decrease in accounts receivable	$21,000
Increase in inventory	($142,000)
Increase in accounts payable	$66,500
Decrease in income tax payable	($19,800)
Net cash from operating activities		$432,320
Cash flow from investing activities
Increase in investment	($30,000)
Sale of property,plant and equipment	$39,900
Net cash from investing activities		$9,900
Cash flow from financing activities
Loans given	($323,600)
Loan repayments received	$74,800
Interest received	$16,180
Dividends	($100,400)
Net cash from investing activities		($333,020)
Net increase in cash and cash equivalents		$109,200
Cash and cash equivalents as on Jan 01,2020		$701,400
Cash and cash equivalents as on Dec 31,2020		$810,600
Working Notes
Computation of depreciation expenses for 2020
Accumulated depreciation - beginning balance	$1,035,600
Add: Depreciation expense for the year	$150,800
Less: Depreciation recouped on sale of equipment	($22,000)
Accumulated depreciation - ending balance	$1,164,400
Depreciation expense = Ending accumulated dep. + depreciation recouped -
Beginning accumulated dep.
= $ 1,164,400 + $ 22,000 - $ 1,035,600
= $ 150,800
Depreciation on equipment sold
Cost of equipment	$59,700
Less: Carrying value on date of sale	$37,700
Accumulated depreciation on equipment	$22,000
Computation of profit on sale of equipment
Sales price of equipment	$39,900
Less: Carrying value of equipment	($37,700)
Profit on sale of equipment	$2,200
Computation of interest received on Loan given
Loan amount	$323,600
Rate of interest	10%
Annual interest income	$32,360
Interest income for six months	$16,180
Note-
Since, the repayment is semi annual and the first repayment is made on
Dec 31,2020, interest for six months is computed and treated as interest
income.
Interest income is reduced from net income and is shown under cashflow from
financing activities