Question

	Statement of Cash Flows
	Angela's Cleaning Consortium				Seymour-Johnson, Inc.
	Comparative Balance Sheet				Income Statement
	December 31, 2020 and 2019				For the Year Ended December 31, 2020
		2020	2019		Net sales		$ 386,000
	ASSETS				Cost of goods sold		(212,000)
	Current assets				Gross profit		174,000
	Cash	$    66,500	$    62,000		Operating expenses
	Accounts receivable	95,000	113,000		Salaries and wages expense		(66,000)
	Merchandise inventory	172,000	165,000		Depreciation expense		(25,000)
	Total current assets	333,500	340,000		Other operating expenses		(28,000)
	Long-term investments				Income from operations		55,000
	Investment in Walking Dead Co.	-	50,000		Other revenues and gains
	Property, buildings, and equipment	507,000	304,000		Interest revenue		15,000
	Less: Accumulated depreciation	(59,500)	(42,000)		Dividend revenue		9,700
	Total assets	$ 781,000	$ 652,000		Gain on disposal of plant assets		12,000
	Liabilities and Stockholders' Equity				Other expenses and losses
	Current liabilities				Interest expense		(15,000)
	Accounts payable	$ 144,000	$ 175,000		Income before income taxes		76,700
	Accrued liabilities	17,000	47,000		Income tax expense		(14,000)
	Total current assets	161,000	222,000		Net Income		$    62,700
	Long-term Liabilities
	Notes payable, long-term	160,000	90,000
	Total liabilities	321,000	312,000
	Stockholders' equity
	Common stock	370,000	250,000
	Retained earnings	140,000	90,000
	Treasury stock	(50,000)	-
	Total Stockholders’ Equity	460,000	340,000
	Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000
	Additional Information:
	A.   Sold plant assets with a cost of $75,000 and accumulated depreciation of $7,500,
	yielding a gain of disposal of plant assets of $12,000.
	B.   Purchased plant assets by paying cash.
	C.   Issued Notes Payable for Cash.
	D.   Sold investment in Walking Dead Co at cost (zero gain/loss).
	E.   Issued Common Stock for Cash.
	F.   Purchased Treasury Stock for Cash.
	Requirements:
	Prepare, in good form, a Statement of Cash Flows using the indirect method.

Answer 1

Cash flow statement using Indirect Method
For the year ended December 31,2020
Cash flow from Operarting activities
Net Income		$62,700.00
Adjustments to Net Income
Depreciation	$25,000.00
Gain on disposal of plant assets	-$12,000.00
Changes in working capital
Decrease in Accounts Receivables	$18,000.00
Increase in Inventory	-$7,000.00
Decrease in Accounts Payable	-$31,000.00
Decrease in accrued liabilities	-$30,000.00	-$37,000.00
Net Cash available from Operating activities		$25,700.00
Cash flow from Investing activities
Sale of plant assets	$79,500.00
Purchase of plant assets	-$278,000.00
Sale of investment in Walking Dead Co	$50,000.00
Net cash used for Investing activities		-$148,500.00
Cash flow from financing activities
Issue of notes payable	$70,000.00
Issue of common stock	$120,000.00
Purchase of Treasury stock	-$50,000.00
Dividend paid	-$12,700.00
Net Cash available from Financing activities		$127,300.00
Net cash surplus / (deficit)		$4,500.00
Add : Cash balance as on 2019		$62,000.00
Ending Cash balance as on 2020		$66,500.00