Question

From the information given, prepare two of the three sections of the cash flow statement. Prepare the “financing” and the “investing” sections.

                                                                                                                         2019             2018

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,000 $    8,000

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,000         32,000

Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000         65,000

Prepaid insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5,000           7,000

Plant assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,000     202,000

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (68,000)   (55,000)

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $328,000 $259,000

Liabilities and Stockholders’ Equity

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $    7,000 $ 10,000

Wages payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       10,000      6,000

Income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         6,000      7,000

Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     141,000 87,000

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        90,000 90,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        74,000 59,000

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $328,000 259000

Cash dividends of $40,000 were paid during 2019. Plant assets were purchased for cash. Bonds payable were issued for cash.

Answer 1

Cash flows from investing activities
Purchase of plant assets	(17,000)
Net cash used in investing activities		(17,000)
Cash flows from financing activities
Issue of bonds payable	54,000
Payment of dividends	(40,000)
Net cash provided by financing activities		14,000
Statement of Cash Flows
For Year Ended December 31, 2019
Cash flows from operating activities
Net Income	55,000
Adjustment for reconcile net income to net cash flows from operating activities:
Depreciation expense	13,000
Increase in accounts receivable	(9,000)
Increase in inventory	(25,000)
Decrease in prepaid insurance	2,000
Decrease in accounts payable	(3,000)
Increase in wages payable	4,000
Decrease in income tax payable	(1,000)
Net cash flow from operating activities		36,000
Cash flows from investing activities
Purchase of plant assets	(17,000)
Net cash used in investing activities		(17,000)
Cash flows from financing activities
Issue of bonds payable	54,000
Payment of dividends	(40,000)
Net cash provided by financing activities		14,000
Net increase in cash		33,000
Cash at the beginning of the period		8,000
Cash at the end of the period		41,000