Question

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

BONITA COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
		2020			2019
Cash		$1,830			$1,180
Receivables		1,710			1,320
Inventory		1,590			1,920
Plant assets		1,890			1,710
Accumulated depreciation		(1,220	)		(1,190	)
Long-term investments (held-to-maturity)		1,320			1,440
		$7,120			$6,380
Accounts payable		$1,190			$890
Accrued liabilities		210			260
Bonds payable		1,400			1,580
Common stock		1,940			1,660
Retained earnings		2,380			1,990
		$7,120			$6,380

BONITA COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$6,720
Cost of goods sold		4,680
Gross margin		2,040
Selling and administrative expenses		920
Income from operations		1,120
Other revenues and gains
Gain on sale of investments		80
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

Answer
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		$         650
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	$        30		1220-1190
Gain on Sale of investments	-$       80
Increase in Accounts Receivable	-$     390		1320-1710
Decrease in inventory	$      330		1920-1590
Increase in accounts payable	$      300		1190-890
Decrease in accrued liabilities	-$       50		210-260
		$         140
Net cash provided by operating activities		$         790
Cash Flows from Investing Activities:
Purchase of Plant Assets	-$     110		(1710-1890)+70
Sale of Held-to-Maturity Investments	$      200		(1440-1320)+80
Net Cash Provided by Investing Activities		$           90
Cash Flows from Financing Activities
Payment of Cash Dividends	-$     260
Redemption of Bonds Payable	-$     180		1400-1580
Issuance of Common Stock (for cash)	$      210		(1940-1660)-70
Net Cash Used by Financing Activities		-$        230
Net Increase in Cash		$         650
Cash at Beginning of Period		$      1,180
Cash at End of Period		$      1,830
Non cash Investing and Financing Activities
Issuance of Common Stock for Plant Assets		70