Question

Condensed financial data of Oakley Company appear below.

Oakley Company Comparative Balance Sheets December 31

Assets 2020 2019

Cash $82,700 $47,250

Accounts receivable 90,800 57,000

Inventory 126,900 102,650

Investments 84,500 87,000

Equipment 255,000 205,000

Accumulated depreciation—equipment (49,500 ) (40,000 )

$590,400 $458,900

Liabilities and Stockholders’ Equity Accounts payable $57,700 $48,280

Accrued expenses payable 12,100 18,830

Bonds payable 100,000 70,000

Common stock 250,000 200,000

Retained earnings 170,600 121,790

$590,400 $458,900

Oakley Company Income Statement For the Year Ended December 31, 2020

Sales revenue $297,500

Gain on disposal of plant assets 8,750

306,250

Less:

Cost of goods sold $99,460

Operating expenses (excluding depreciation expense) 14,670

Depreciation expense 49,700

Income tax expense 7,270

Interest expense 2,940

174,040

Net income $132,210

Additional information:

1. Equipment costing $97,000 was purchased for cash during the year.

2. Investments were sold at cost.

3. Equipment costing $47,000 was sold for $15,550, resulting in gain of $8,750.

4. A cash dividend of $83,400 was declared and paid during the year.

Prepare a worksheet for the statement of cash flows using the indirect method. Enter the reconciling items directly in the worksheet columns. (Show details of retained earnings and accumulated depreciation, do not net)

Answer 1

Answer-

OAKLEY COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2020
Particulars		Amount
		$
Cash flow from operating activities
Net loss		132210
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		49700
Gain on disposal of plant assets		-8750
Change in operating assets & liabilities
Increase in accounts receivable		-33800
Increase in inventory		-24250
Increase in accounts payable		9420
Decrease in accrued expenses payable		-6730
Net cash flow from operating activities (a)		117800
Cash Flow from Investing activities
New equipment purchased		-97000
Old equipment sold		15550
Long-term investments sold		2500
Net cash Flow from Investing activities (b)		-78950
Cash Flow from Financing activities
Cash dividends paid	($121790+$132210-$170600)	-83400
Common stock issued		50000
Bonds payable issued		30000
Net cash Flow from Financing activities (c)		-3400
Net Change in cash c=a+b+c		35450
Beginning cash balance		47250
Closing cash balance		82700