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The comparative balance sheets for Sage Hill Company appear below: SAGE HILL COMPANY Comparative Balance Sheet...

The comparative balance sheets for Sage Hill Company appear below:

SAGE HILL COMPANY
Comparative Balance Sheet

Assets

Dec. 31, 2022

Dec. 31, 2021

Cash

 $31,100 $15,000

Accounts receivable

 20,000 13,500

Inventory

 34,900 19,100

Prepaid insurance

 8,500 9,000

Stock investments

 -0- 18,000

Equipment

 71,000 35,500

Accumulated depreciation-equipment

 (15,800 ) (12,300 )

    Total assets

 $149,700 $97,800

Liabilities and Stockholder's Equity

Accounts payable

 $28,600 $7,900

Bonds payable

 39,100 48,800

Common stock

 43,400 22,000

Retained earnings

 38,600 19,100

    Total liabilities and stockholder's equity

 $149,700 $97,800
Additional information:
1. Net income for the year ending December 31, 2022, was $33,000.
2. Cash dividends of $13,100 were declared and paid during the year.
3. Stock investments on balance sheet that had a book value of $17,600 were sold for $11,100.
4. Sales for 2022 are $140,000.

Prepare a statement of cash flows for the year ended December 31, 2022, 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).)

Solutions

Expert Solution

SAGE HILL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2022
Cash flows from operating activities
Net Income       33,000
Adjust to reconcile net income to net cash provided by operations:
Depreciation expense         3,500
Loss on sale of investment         6,500
Increase in accounts receivable        (6,500)
Increase in inventory      (15,800)
Decrease in prepaid insurance            500
Increase in accounts payable       20,700
Net Cash Flow provided by operating activities       41,900
Cash flows from investing activities
Purchase of equipment      (35,500)
Sale of stock investments       11,100
Net Cash Flow used by investing activities      (24,400)
Cash flows from financing activities
Redemption of bonds payable        (9,700)
Issue in common stock       21,400
Dividends paid      (13,100)
Net Cash Flow used by financing activities       (1,400)
Net Increase (decrease) in cash       16,100
Cash balance at December 31, prior year       15,000
Cash balance at December 31, current year      31,100

ekkarill92 answered 1 year ago
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