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In: Accounting

The following are relevant account balances from ABC's comparative balance sheet and 2019 income statement ABC's...

The following are relevant account balances from ABC's comparative balance sheet and 2019 income statement

ABC's balance sheet

December 31,2019

January 1, 2019
Cash $ 6,000 $ 9,000
Accounts Receivable $ 8,000 $ 12,000
Merchandise Inventory $ 29,000 $ 18,000
Prepaid Rent $ 6,000 $ 4,000
Equipment $ 100,000 $ 80,000
Accumulated Depreciation $ (28,000) $ (13,000)
Total Assets $ 121,000 $110,000
Accounts Payable $ 9,000 $ 25,000
Unearned Revenue $ 6,000 $ 4,000
Common Stock $ 38,000 $ 32,000
Retained Earnings $ 68,000 $ 49,000
Total Liabilities and Shareholders Equity $ 121,000 $ 110,000

Other Information: No equipment was sold or retired during 2019. ABC's net income for 2019 was $33,000

Prepare the statement of cash flow for 2019

Solutions

Expert Solution

ABC
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash Flows from Operating Activities:
Net income 33000
Adjustments to reconcile net income to net cash flow from operations:
Depreciation expense ($28000 - $13000) 15000
Decrease in Accounts Receivable 4000
Increase in Merchandise Inventory -11000
Increase in Prepaid Rent -2000
Decrease in Accounts Payable -16000
Increase in Unearned Revenue 2000 -8000
Net cash flow from operating activities 25000
Cash Flows from Investing Activities:
Purchase of equipment -20000
Net cash flow from investing activities -20000
Cash Flows from Financing Activities:
Issuance of common stock 6000
Payment of dividends ($49000 + $33000 - $68000) -14000
Net cash flow from financing activities -8000
Net increase (decrease) in cash -3000
Cash balance, January 1, 2019 9000
Cash balance, December 31, 2019 6000

ekkarill92 answered 1 year ago
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