Question

In: Accounting

Blackwell Company's income statement for 2020 consisted of: Revenues 1,220,000 Cost of goods sold 627,000 Operating...

Blackwell Company's income statement for 2020 consisted of:
Revenues 1,220,000
Cost of goods sold 627,000
Operating expenses 295,000
Depreciation expense 60,000
Interest expense 26,000
Gain on the sale of machinery (12,000)
Loss on the sale of investments 8,000 1,004,000
Income before income tax 216,000
Income tax expense 40,000
Net income 176,000
Blackwell's comparative balance sheet information for 2020 included:
12/31/20 12/31/19
Accounts receivable 268,000 257,000
Accounts payable 47,000 42,000
Income taxes payable 17,000 13,500
Interest payable 9,000 7,500
Bonds payable 500,000 500,000
Discount on bonds payable 26,000 28,000
Prepare the Cash flows from operating activities section of Blackwell's 2020 Statement of Cash Flows using the indirect method
and the required disclosures for interest and income tax expense.

Solutions

Expert Solution

Net Income $        176,000
Add
Depreciation $          60,000
Interest expense $          26,000
Loss on sale of investment $            8,000
Income Tax $          40,000
Amortisation $2000 $        136,000
Less-
Gain on the sale of machinery $        (12,000)
Interest Paid $        (24,500)
Income Tax paid $        (36,500) $        (73,000)
Fund Flow before changes in Working Capital $        239,000
Less - Increase in Accounts receivable $        (11,000)
Add - Increase in Accounts Payable $            5,000
Changes in Working capital $          (6,000)
Cashflow from operations $        233,000
Opening Income Tax Payable 13,500.00
Add - Current Yr Income Tax 40,000.00
Less - Closing Income Tax Payable -17000
Cash Paid for Income Tax 36,500.00
Opening Interest Payable 7,500.00
Add - Interest exp 26,000.00
Less - Closing Interest Payable -9000
Cash Paid for Interest 24,500.00

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