Question

Martinez Inc. had the following balance sheet at December 31, 2019.

MARTINEZ INC. BALANCE SHEET DECEMBER 31, 2019
Cash		$ 25,930		Accounts payable		$ 35,930
Accounts receivable		27,130		Bonds payable		46,930
Investments		32,000		Common stock		105,930
Plant assets (net)		86,930		Retained earnings		29,130
Land		45,930				$217,920
		$217,920

During 2020, the following occurred.

1.		Martinez liquidated its available-for-sale debt investment portfolio at a loss of $10,930.
2.		A tract of land was purchased for $43,930.
3.		An additional $30,000 in common stock was issued at par.
4.		Dividends totaling $15,930 were declared and paid to stockholders.
5.		Net income for 2020 was $40,930, including $17,930 in depreciation expense.
6.		Land was purchased through the issuance of $35,930 in additional bonds.
7.		At December 31, 2020, Cash was $76,130, Accounts Receivable was $47,930, and Accounts Payable was $45,930.

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

Answer 1

Answer-

MARTINEZ
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31, 2020
Particulars		Amount
		$
Cash flow from operating activities
Net Income		40930
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expense		17930
Loss on sale of investments		10930
Change in operating assets & liabilities
Increase in Accounts receivable		-20800
Increase in accounts payable		10000
Net cash flow from operating activities (a)		58990
Cash Flow from Investing activities
Tract of land purchased		-43930
Investments sold		21070
Net cash Flow from Investing activities (b)		-22860
Cash Flow from Financing activities
Cash dividends paid		-15930
Common stock issued		30000
Net cash Flow from Financing activities (c)		14070
Net Change in cash c=a+b+c		50200
Beginning cash balance		25930
Closing cash balance		76130
Schedule of non cash investing & financing activities
Issuance of bonds for purchase of land		35930