Question

Metlock Company has not yet prepared a statement of cash flows for the 2020 fiscal year. Comparative balance sheets as of December 31, 2019 and 2020, and a statement of income and retained earnings for the year ended December 31, 2020, are presented as follows.

METLOCK COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 ($000 OMITTED)
Sales revenue				$3,810
Expenses
Cost of goods sold		$1,200
Salaries and benefits		720
Heat, light, and power		70
Depreciation		80
Property taxes		20
Patent amortization		20
Miscellaneous expenses		10
Interest		30		2,150
Income before income taxes				1,660
Income taxes				830
Net income				830
Retained earnings—Jan. 1, 2020				350
				1,180
Stock dividend declared and issued				650
Retained earnings—Dec. 31, 2020				$530

METLOCK COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 ($000 OMITTED)
Assets		2020			2019
Current assets
Cash		$341			$190
U.S. Treasury notes (available-for-sale)		10			50
Accounts receivable		780			480
Inventory		740			550
Total current assets		1,871			1,270
Long-term assets
Land		150			70
Buildings and equipment		900			610
Accumulated depreciation—buildings and equipment		(200	)		(120	)
Patents (less amortization)		110			130
Total long-term assets		960			690
Total assets		$2,831			$1,960
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$384			$350
Income taxes payable		37			30
Notes payable		310			310
Total current liabilities		731			690
Long-term notes payable—due 2022		220			220
Total liabilities		951			910
Stockholders’ equity
Common stock		1,350			700
Retained earnings		530			350
Total stockholders’ equity		1,880			1,050
Total liabilities and stockholders’ equity		$2,831			$1,960

Answer 1

METLOCK COMPANY
Statement of Cash flows (Indirect method)
For the Year Ended December 31, 2020
Cash flows from operating activities
Net Income		$    830
Adjustments to reconcile net income to ;
Depreciation expense	$       80
Amortization expense	$       20
Increase in accounts receivable	$ (300)
Increase in inventory	$ (190)
Increase in accounts payable	$       34
Increase in income tax payable	$         7
		$ (349)
Net cash provided by operating activities		$    481
Cash flows from investing activities
Cash paid for purchase of equipment	$ (290)		610-900
Cash paid for purchase of land	$    (80)		70-150
Cash received from sale of US treasury notes	$       40		50-10
Net cash used by investing activities		$ (330)
Cash flows from financing activities
Dividends paid	$ (650)		530-350-830
Cash received from issuance of common stock	$    650
Net cash provided by financing activities		$          -
Net Increase in cash		$    151
Cash and cash equivalents at beginning of period		$    190
Cash and cash equivalents at end of period		$    341

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