Question

Condensed financial data of Sandhill Company for 2020 and 2019 are presented below.

SANDHILL COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
		2020			2019
Cash		$1,790			$1,170
Receivables		1,780			1,310
Inventory		1,580			1,900
Plant assets		1,900			1,720
Accumulated depreciation		(1,180	)		(1,140	)
Long-term investments (held-to-maturity)		1,310			1,420
		$7,180			$6,380
Accounts payable		$1,220			$880
Accrued liabilities		210			240
Bonds payable		1,380			1,550
Common stock		1,930			1,660
Retained earnings		2,440			2,050
		$7,180			$6,380

SANDHILL COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$6,690
Cost of goods sold		4,650
Gross margin		2,040
Selling and administrative expenses		930
Income from operations		1,110
Other revenues and gains
Gain on sale of investments		90
Income before tax		1,200
Income tax expense		550
Net income		650
Cash dividends		260
Income retained in business		$390

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Statement of Cash Flows - Indirect Approach
	Amount in $	Amount in $
Net income		$                   650
Cash flows from operating activities
Adjustments for reconcile the net income o net cash provided by operating activities
Income statement items not affecting cash
Depreciation Expenses	$                      40
Gain on sales of equipment	$                    -90
Change in current assets and current liabilities:
Increase in account receivable	$                  -470
Decrease in inventory	$                   320
Increase on account payable	$                   340
Decrease on accrued liabilities	$                    -30
		$                   110
Net cash from operating activities		$                   760
Cash flows from investing activities
Sale of investment	$                   200
Purchase of plant	$                  -110
Net cash used in investing activities		$                      90
Cash flows from Financing activities
Isseue of common stock	$                   200
Repayment of bonds payable	$                  -170
Dividend Paid	$                  -260
Net cash used in financing activities		$                  -230
Net increase in cash and cash equivalents		$                   620
Add :Cash and cash equivalents at beginning of period		$                1,170
Cash and cash equivalents at end of period		$                1,790