Question

The Airport Shuttle Services Inn provides the following balance sheet, income statement and other information.

Use this information to complete a Statement of Cash Flows using the Indirect Method.

Airport Shuttle Services: Balance Sheets 12/31

	20X1	20X2
ASSETS
Cash	$ 34,000	$ 56,000
Accounts Receivable	30,000	20,000
Prepaid Expenses	0	4,000
Land	0	130,000
Building	0	160,000
Equipment	10,000	27,000
Accumulated Depreciation	0	(14,000)
Total Assets	$ 74,000	$ 383,000
LIABILITIES AND EQUITIES
Accounts Payable	$ 4,000	$ 59,000
Bonds Payable	0	130,000
Common Stock	50,000	50,000
Retained Earnings	20,000	144,000
Total Liabilities and Equities	$ 74,000	$ 383,000

Airport Shuttle Services: Income Statement 12/31

Revenues		$ 507,000
Operating Expenses	$ 261,000
Depreciation Expenses	15,000
Loss on Sale of Equipment	3,000
Total Expenses		279,000
Operating Income		228,000
Income Taxes		89,000
Net Income		$ 139,000

Airport Shuttle Services: Additional Information

1. The company declared and paid a $ 15,000 cash dividend.
2. The company obtained land through the issuance of $ 130,000 in long-term bonds.
3. A building costing $ 160,000 was purchased with cash.
4. Equipment costing $ 25,000 was purchased with cash.
5. The company sold equipment with a book value of $ 7,000 (cost was $ 8,000 with accumulated depreciation of $ 1,000) for cash of $ 4,000.

Answer 1

Airport Shuttle Services Inn
Statement of Cash flows
For the Year Ended December 31, 20X2
Cash flows from operating activities
Net Income		$    139,000
Adjustments to reconcile net income to ;
Depreciation expense	$       15,000
Loss on sale of equipment	$         3,000
Decrease in accounts receivable	$       10,000
Increase in prepaid expenses	$       (4,000)
Increase in accounts payable	$       55,000
		$       79,000
Net cash provided by operating activities		$    218,000
Cash flows from investing activities
Cash received from sale of equipment	$         4,000
Cash paid for purchase of building	$ (160,000)
Cash paid for purchase of equipment	$    (25,000)
Net cash used by investing activities		$ (181,000)
Cash flows from financing activities
Payment of dividends	$    (15,000)
Net cash used by financing activities		$    (15,000)
Net Increase in cash		$       22,000
Cash and cash equivalents at beginning of period		$       34,000
Cash and cash equivalents at end of period		$       56,000
Non cash investing and financing activities
Acquisition of land by issuing long term bond		$     130,000

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