Question

Statement of Cash Flows (Direct Method) Wolff Company's income statement and comparative balance sheets follow. WOLFF COMPANY Income Statement For Year Ended December 31, 2019 Sales $508,000 Cost of goods sold $344,000 Wages expense 68,800 Insurance expense 6,400 Depreciation expense 13,600 Interest expense 7,200 Income tax expense 23,200 463,200 Net income $44,800 WOLFF COMPANY Balance Sheet Dec. 31, 2019 Dec. 31, 2018 Assets Cash $8,800 $4,000 Accounts receivable 32,800 25,600 Inventory 72,000 48,000 Prepaid insurance 4,000 5,600 PPE 200,000 156,000 Accumulated depreciation (54,400) (40,800) Total assets $263,200 $198,400 Liabilities and Stockholders' Equity Accounts payable $5,600 $8,000 Wages payable 7,200 4,800 Income tax payable 5,600 6,400 Bonds Payable 104,000 60,000 Common stock 72,000 72,000 Retained earnings 68,800 47,200 Total liabilities and equity $263,200 $198,400 Cash dividends of $23,200 were declared and paid during 2019. Also in 2019, PPE was purchased for cash, and bonds payable were issued for cash. Bond interest is paid semiannually on June 30 and December 31. Accounts payable relate to merchandise purchases. Required a. Compute the change in cash that occurred during 2019. Note: Do not use a negative sign with your answer. $Answer 0 Answer b. Prepare a 2019 statement of cash flows using the direct method. Note: Use a negative sign to indicate a cash outflow. Wolff Company Statement of Cash Flows For Year Ended December 31, 2019 Operating Activities Cash Received from Customers Answer 0 Answer Answer 0 Cash Paid to Employees Answer 0 Cash Paid for Insurance Answer 0 Cash Paid for Interest Answer 0 Cash Paid for Income Taxes Answer 0 Answer Answer 0 Investing Activities Answer Answer 0 Answer Answer 0 Financing Activities Answer Answer 0 Payment of Dividends Answer 0 Answer Answer 0 Net Increase in Cash Answer 0 Cash at Beginning of Year Answer 0 Cash at End of Year Answer 0?

Answer 1

1) Change in cash during 2103= Ending cash balance-Beginning cash balance

= 8800 - 4000= $4800 Increase

2)

Wolff Company
Statement of Cash Flows
For Year Ended December 31, 2019
Operating Activities
Cash Received from Customers	500800
Cash Paid for Merchandise Purchased	-370400
Cash Paid to Employees	-66400
Cash Paid for Insurance	-4800
Cash Paid for Interest	-7200
Cash Paid for Income Taxes	-24000
Net Cash Provided by Operating Activities		28000
Investing Activities
Cash Paid for PPE	-44000
Net Cash Used by Investing Activities		-44000
Financing Activities
Issuance of Bonds	44000
Payment of Dividends	-23200
Net Cash Provided by Financing Activities		20800
Net Increase in Cash		4800
Cash at Beginning of Year		4000
Cash at End of Year		8800

3) Free cash flow = Cash flow provided by operating activities - Capital expenditure

= $28000- 44000= $ -16000