Question

A comparative balance sheet for Carla Corporation is presented as follows.

		December 31
Assets		2020			2019
Cash		$ 72,880			$ 22,000
Accounts receivable		84,590			68,710
Inventory		182,590			191,710
Land		73,590			112,710
Equipment		262,590			202,710
Accumulated Depreciation-Equipment		(71,590	)		(44,710	)
Total		$604,650			$553,130
Liabilities and Stockholders' Equity
Accounts payable		$ 36,590			$ 49,710
Bonds payable		150,000			200,000
Common stock ($1 par)		214,000			164,000
Retained earnings		204,060			139,420
Total		$604,650			$553,130

Additional information:

1.		Net income for 2020 was $130,180. No gains or losses were recorded in 2020.
2.		Cash dividends of $65,540 were declared and paid.
3.		Bonds payable amounting to $50,000 were retired through issuance of common stock.

(a)

Prepare a statement of cash flows for 2020 for Carla Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer-a)-

CARLA CORPORATION
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER, 2020
Particulars		Amount
		$
Cash flow from operating activities
Net Income		130180
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		26880
Change in operating assets & liabilities
Increase in accounts receivable		-15880
Decresae in inventory		9120
Increase in accounts payable		-13120
Net cash flow from operating activities (a)		137180
Cash Flow from Investing activities
Equipment purchased		-59880
Land sold		39120
Net cash Flow from Investing activities (b)		-20760
Cash Flow from Financing activities
Cash dividends paid		-65540
Common stock issued
Net cash Flow from Financing activities (c)		-65540
Net Change in cash c=a+b+c		50880
Beginning cash balance		22000
Closing cash balance		72880
Schedule of non cash investing & financing activities
Bonds payable paid by issuing common stock		$50000