Question

The following information is provided for Blossom’s Chocolate Company:

BLOSSOM CHOCOLATE COMPANY Balance Sheet May 31
Assets		2021			2020
Cash		$28,425			$47,500
Accounts receivable		89,700			79,500
Inventory		187,000			160,500
Prepaid expenses		6,200			7,700
Land		139,500			81,000
Equipment		322,000			202,000
Accumulated depreciation—equipment		(80,200	)		(40,500	)
Total assets		$692,625			$537,700
Liabilities and Shareholders’ Equity
Accounts payable		$43,300			$40,500
Dividends payable		7,700			6,200
Income taxes payable		3,400			7,200
Mortgage payable		134,000			80,500
Common shares		220,000			166,500
Retained earnings		284,225			236,800
Total liabilities and shareholders’ equity		$692,625			$537,700

Additional Information:
1.		Profit for 2021 was $110,925.
2.		Common shares were issued for $53,500.
3.		Land with a cost of $53,500 was sold at a loss of $20,200.
4.		Purchased land with a cost of $112,000 with a $58,500 down payment and financed the remainder with a mortgage note payable.
5.		No equipment was sold during 2021.
6.		Net sales for the year were $675,400.
7.		Cost of goods sold for the year was $401,600.
8.		Operating costs, including depreciation expense, were $99,500.
9.		Interest expense was $6,200.
10.		Income tax expense was $36,975.
11.		Accounts payable is used for merchandise purchases.

Prepare a cash flow statement for the year using the direct method

Answer 1