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Question 23 The following information is taken from Debra Corporation's financial statements: December 31 2021 2020...

Question 23

The following information is taken from Debra Corporation's financial statements:

December 31

2021

2020

Cash

$ 68,670

$ 29,430

Accounts receivable

111,180

87,200

Allowance for doubtful accounts (4,905) (3,379)
Inventory

174,400

190,750

Prepaid expenses

8,175

7,412

Land

109,000

65,400

Buildings

320,460

265,960

Accumulated depreciation (34,880) (14,170)
Patents

21,800

38,150

$773,900

$666,753

Accounts payable

$ 98,100

$ 91,560

Accrued liabilities

58,860

68,670

Bonds payable

136,250

65,400

Common stock

109,000

109,000

Retained earnings―appropriated

87,200

10,900

Retained earnings―unappropriated

300,840

329,943

Treasury stock, at cost (16,350) (8,720)

$773,900

$666,753

For 2021 Year

Net income

$85,347

Depreciation expense

20,710

Amortization of patents

5,450

Cash dividends declared and paid

38,150

Gain or loss on sale of patents

none


Prepare a statement of cash flows for Debra Corporation for the year 2021. (Use the indirect method.)

Solutions

Expert Solution

Statement of Cashflow (Indirect Method)
For the year ended dec 31,2021
Net Income $   85,347.00
Adjustment to reconcile Net income to net cash provided by operating Activities
Depreciation Expense   $ 20,710.00
Amortisation of Patents $    5,450.00
Increase in Account receivable Net of allowance ( Beg Bal. $83,821-End bal $ 106,275) $ -22,454.00
Decrease in Inventory (Beg Bal. $190,750-End Bal $174,400) $ 16,350.00
Increase in prepaid exp ( Beg Bal. $7,412-End bal $ 8,175) $      -763.00
Decrease in accrued liabiltiei (Beg Bal. $68,670-End Bal $58,860) $   -9,810.00
Increase in Account Payable ( Beg Bal. $91,560- End Bal. $98,100) $    6,540.00 $   16,023.00
Net Cash flow from operating Activities $ 101,370.00 A
Cashflows from Investing Activities
Purchase of Building (Beg Bal. 265,960-End Bal. 320,460 $ -54,500.00
Purchase of Land (Beg Bal $65,400-End Bal $109,000) $ -43,600.00
Proceed from sale of Patents -Refer Table $ 10,900.00 $ -87,200.00
Net Cashflows from Investing Activities $ -87,200.00 B
Cashflows from Financing Activities
Payment of Dividend $ -38,150.00
Purchase of Treasury Stock (Beg.Bal $ 8,720-End Bal $ 16,350) $   -7,630.00
Issuance of Bond (Beg. Bal $65,400-End Bal.$136,250) $ 70,850.00 $   25,070.00
Net Cashflows from Financing Activities $   25,070.00 C
Net Increase/(Decrease) in Cash $   39,240.00 A+B+C
Beginning Cash in Hand $ 29,430.00
Ending Cash in Hand $ 68,670.00 $   39,240.00
Net Increase/(Decrease) in Cash

Calculation of Patent

Patent
Beg Bal $ 38,150.00
Less Amortisation $   5,450.00
Less End Bal $ 21,800.00
Proceed from sale $ 10,900.00

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