Question

The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.

GREAT ADVENTURES, INC.
Income Statement
For the year ended December 31, 2022
Net revenues:				$	166,380
Expenses:
Cost of goods sold	$	38,600
Operating expenses		52,620
Depreciation expense		17,400
Interest expense		7,034
Income tax expense		15,280
Total expenses					130,934
Net income				$	35,446

GREAT ADVENTURES, INC.
Balance Sheets
December 31, 2022 and 2021
									Increase (I) or
	2022				2021				Decrease (D)
Assets
Current assets:
Cash	$	188,204			$	65,200			$	123,004		(I)
Accounts receivable		47,780				0				47,780		(I)
Inventory		7,200				0				7,200		(I)
Other current assets		920				4,580				3,660		(D)
Long-term assets:
Land		520,000				0				520,000		(I)
Buildings		806,000				0				806,000		(I)
Equipment		64,060				41,000				23,060		(I)
Accumulated depreciation		(25,450	)			(8,050	)			17,400		(I)
Total assets	$	1,608,714			$	102,050
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	21,000			$	2,840			$	18,160		(I)
Interest payable		760				760
Income tax payable		15,280				14,020				1,260		(I)
Other current liabilities		21,600				0				21,600		(I)
Notes payable (current and long-term)		543,838				30,200				513,638		(I)
Stockholders’ equity:
Common stock		122,000				20,000				102,000		(I)
Paid-in capital		922,200				0				922,200		(I)
Retained earnings		58,036				33,550				24,486		(I)
Treasury stock		(96,000	)			0				(96,000	)	(I)
Total liabilities and stockholders’ equity	$	1,608,714			$	102,050

Additional Information for 2022:

1. Land of $520,000 was obtained by issuing a note payable to the seller.
2. Buildings of $806,000 and equipment of $23,060 were purchased using cash.
3. Monthly payments during the year reduced notes payable by $6,362.
4. Issued common stock for $1,020,000.
5. Purchased 10,200 shares of treasury stock for $16 per share.
6. Sold 4,200 shares of treasury stock at $17 per share.
7. Declared and paid a cash dividend of $12,320.

Required:

Prepare the statement of cash flows for the year ended December 31, 2022, using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

GREAT ADVENTURES, INC. Statement of Cash Flows For the Year Ended December 31, 2022 Cash Flows from Operating Activities Adjustments to reconcile net income to net cash flows from operating activities: Net cash flow from operating activities $0 Cash Flows from Investing Activities Net cash flow from investing activities 0 Cash Flows from Financing Activities Net cash flows from financing activities 0 0 Cash at the beginning of the period Cash at the end of the period $0 Note: Noncash Activities

Answer 1

Solution

GREAT ADVENTURES INC.
Cash Flow Statement
For year ended 31st December 2022
A. Cash Flows from Operating Activity
Net Income	$           35,446.00
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	$           17,400.00
Changes in current operating assets and liabilities:
Increase in Accounts receivables	$        (47,780.00)
Increase in Accounts payable	$           18,160.00
Increase in Inventory	$           (7,200.00)
Decrease in other current assets	$             3,660.00
Increase in taxes payable	$             1,260.00
Increase in other current liabilities	$           21,600.00
Net cash flow from Operating activities		$           42,546.00
B. Cash flows from Investing Activities
Purchase of equipment	$        (23,060.00)
Purchase of Building	$      (806,000.00)
Net cash flow used for investing activities		$      (829,060.00)
C. Cash Flows from Financing activities
Cash received from sale of common stock	$     1,020,000.00
Cash paid for dividends	$        (12,320.00)
Purchase of Treasury stock	$      (163,200.00)
Reissue of Treasury stock	$           71,400.00
Repayment of notes payable	$           (6,362.00)
Cash flows from Financing activities		$        909,518.00
Net Increase (Decrease) in Cash [A+B+C]		$        123,004.00
Cash at the beginning		$           65,200.00
Cash at the end of the period		$        188,204.00
Note: Non cash activity
Issue of notes payable in exchange of Land		$        520,000.00