Question

Problem 2:

The information shown below is taken from the accounts of Waverly Corporation for the year ended December 31, 2020.

Net income	$314,000
Amortization of patent	12,000
Proceeds from issuance of common stock	103,000
Decrease in inventory	27,000
Sale of building at a $15,000 gain	85,000
Decrease in accounts payable	15,000
Purchase of equipment	185,000
Payment of cash dividends	24,000
Depreciation expense	55,000
Decrease in accounts receivable	23,000
Payment of mortgage	75,000
Increase in short-term notes payable	8,000
Sale of land at a $5,000 loss	40,000
Purchase of delivery van	33,000
Cash at beginning of year	205,000

Instructions

Prepare a statement of cash flows for Robinson Corporation for the year ended December 31,

2020.

Answer 1

Statement of cash flows

Cash flow from operating activities
Net income	314000
Adjustment to reconcile net income to net cash provided by operating activities
Amortization of patent	12000
Depreciation expense	55000
Decrease inventory	27000
Decrease in accounts receivable	23000
Gain on sale of building	-15000
Loss on sale of land	5000
Decrease in accounts payable	-15000
Net cash flow from operating activities		406000
Cash flow from investing activities
Purchase of delivery van	-33000
Sale of building	85000
Purchase of equipment	-185000
Sale of land	40000
Net cash used in investing activities		-93000
Cash flow from financing activities
Proceeds from issuance of common stock	103000
Payment of cash dividends	-24000
Payment of mortgage	-75000
Increase in short-term notes payable	8000
Net cash flow from financing activities		12000
Net cash increase		325000
Cash at beginning of year		205000
Cash at end of year		530000