Bonita Industries's balance sheet accounts as of December 31, 2021 and 2020 and information relating to...

Bonita Industries's balance sheet accounts as of December 31, 2021 and 2020 and information relating to 2021 activities are presented below.

	December 31,
	2021	2020
Assets
Cash	$ 442000	$ 200000
Short-term investments	601000	—
Accounts receivable (net)	1020000	1020000
Inventory	1360000	1180000
Long-term investments	398000	600000
Plant assets	3410000	2000000
Accumulated depreciation	(902000)	(902000)
Patent	178000	199000
Total assets	$6507000	$4297000
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities	$1680000	$1460000
Notes payable (nontrade)	581000	—
Common stock, $10 par	1638000	1410000
Additional paid-in capital	799000	498000
Retained earnings	1809000	929000
Total liabilities and stockholders' equity	$6507000	$4297000

Information relating to 2021 activities:

• Net income for 2021 was $1480000.
• Cash dividends of $600000 were declared and paid in 2021.
• Equipment costing $1020000 and having a carrying amount of $318000 was sold in 2021 for $358000.
• A long-term investment was sold in 2021 for $318000. There were no other transactions affecting long-term investments in 2021.
• 22800 shares of common stock were issued in 2021 for $25 a share.
• Short-term investments consist of treasury bills maturing on 6/30/22.

Net cash provided by Bonita’s 2021 operating activities was

$2167000.

$1480000.

$2127000.

$2087000.

Expert Solution

Correct answer-----------$2087000.

Working

Cash flows from operating activities:
Net income		$ 1,480,000.00
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	$ 702,000.00
Gain on sale of Investment	$ (116,000.00)
Gain on sale of Equipment	$ (40,000.00)
Patent amortization	$ 21,000.00
Changes in current operating assets and liabilities:
Increase in Inventory	$ (180,000.00)
Increase in Accounts payable and accrued liabilities	$ 220,000.00
		$ 607,000.00
Net cash flow from operating activities		$ 2,087,000.00

Calculation of Depreciation for the year
Opening Accumulated depreciation balance	$ 902,000.00
Less: Depreciation of Equipment sold(1020000-318000)	$ 702,000.00
	$ 200,000.00
Les: Closing balance of Accumulated depreciation	$ 902,000.00
Depreciation Expense for the year	$ 702,000.00

ekkarill92 answered 1 year ago

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