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		$1,760			$1,180
Receivables		1,780			1,280
Inventory		1,610			1,920
Plant assets		1,880			1,660
Accumulated depreciation		(1,220	)		(1,190	)
Long-term investments (held-to-maturity)		1,310			1,400
		$7,120			$6,250
Accounts payable		$1,170			$880
Accrued liabilities		190			240
Bonds payable		1,390			1,540
Common stock		1,910			1,730
Retained earnings		2,460			1,860
		$7,120			$6,250

BONITA COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$7,020
Cost of goods sold		4,780
Gross margin		2,240
Selling and administrative expenses		910
Income from operations		1,330
Other revenues and gains
Gain on sale of investments		70
Income before tax		1,400
Income tax expense		540
Net income		860
Cash dividends		260
Income retained in business		$600

Additional information:

During the year, $80 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
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income		860
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	30
Gain on Sale of investments	-70
Increase in receivables	-500
Decrease in inventory	310
Increase in accounts payable	290
Decrease in accrued liabilities	-50
		10
Net cash provided by operating activities		870
Cash Flows from Investing Activities:
Purchase of Plant Assets	-140		=(1880-1660)-80
Sale of Held-to-Maturity Investments	160		=(1400-1310)+70
Net Cash Provided by Investing Activities		20
Cash Flows from Financing Activities
Payment of Cash Dividends	-260
Redemption of Bonds Payable	-150
Issuance of Common Stock	100		=(1910-1730)-80
Net Cash Used by Financing Activities		-310
Net Increase in Cash		580
Cash at Beginning of Period		1180
Cash at End of Period		1760
Noncash Investing and Financing Activities
Issuance of Common Stock for Plant Assets		80