The following data are taken from the records of Alee Company. December 31, 2020 December 31,...

The following data are taken from the records of Alee Company. December 31, 2020 December 31, 2019 Cash $ 15,000 $ 8,000 Current assets other than cash 85,000 60,000 Long-term debt investments 10,000 53,000 Plant assets 335,000 215,000 $445,000 $336,000 Accumulated depreciation $ 20,000 $ 40,000 Current liabilities 40,000 22,000 Bonds payable 75,000 –0– Common stock 254,000 254,000 Retained earnings 56,000 20,000 $445,000 $336,000 Additional information: Held-to-maturity debt securities carried at a cost of $43,000 on December 31, 2019, were sold in 2020 for $34,000. The loss (not unusual) was incorrectly charged directly to Retained Earnings. Plant assets that cost $50,000 and were 80% depreciated were sold during 2020 for $8,000. The loss was incorrectly charged directly to Retained Earnings. Net income as reported on the income statement for the year was $57,000. Dividends paid amounted to $10,000. Depreciation charged for the year was $20,000. Instructions Prepare a statement of cash flows for the year 2020 using the indirect method.

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Expert Solution

Alee Company
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash flows from operating activities
Net Income		46,000
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation expense	20,000
Loss on sale of investments	9,000
Loss on sale of plant assets	2,000
Increase in current assets other than cash	(25,000)
Increase in current liabilities	18,000
		24,000
Net cash provided by operating activities		70,000
Cash flows from investing activities
Sale of Plant Assets	8,000
Sale of held-to-maturity investments	34,000
Purchase of plant assets	(170,000)
Net cash used by investing activities		(128,000)
Cash flows from financing activities
Issuance of bonds payable	75,000
Payment of cash dividends	(10,000)
Net cash provided by financing activities		65,000
Net increase/(decrease) in cash		7,000
Cash balance, January 1, 2020		8,000
Cash balance, December 31, 2020		15,000

Net income $57,000 – $9,000 – $2,000 = $46,000

ekkarill92 answered 1 year ago

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