Question

In: Accounting

Burns Corporation's net income last year was $94,600. Changes in the company's balance sheet accounts for...

Burns Corporation's net income last year was $94,600. Changes in the company's balance sheet accounts for the year appear below:

Increases
(Decreases)
Asset and Contra-Asset Accounts:
Cash and cash equivalents $ 17,000
Accounts receivable $ 13,300
Inventory $ (16,600 )
Prepaid expenses $ 4,300
Long-term investments $ 10,300
Property, plant, and equipment $ 73,500
Accumulated depreciation $ 31,600
Liability and Equity Accounts:
Accounts payable $ (18,400 )
Accrued liabilities $ 17,100
Income taxes payable $ 4,200
Bonds payable $ (64,200 )
Common stock $ 41,200
Retained earnings $ 90,300

The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,300.

Required:

a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

b. Prepare the investing activities section of the company's statement of cash flows for the year.

c. Prepare the financing activities section of the company's statement of cash flows for the year.

Solutions

Expert Solution

a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

Net income 94600
Adjustment to reconcile net income
Depreciation expense 31600
Increase account receivable -13300
Decrease inventory 16600
Increase prepaid expense -4300
Decrease account payable -18400
Increase accured liabilities 17100
Increase income tax payable 4200
Net cash flow from operating activities 128100

b. Prepare the investing activities section of the company's statement of cash flows for the year.

Cash flow from investing activities
Purchase long term investment -10300
Purchase property,plant and equipment -73500
Net cash flow from investing activity -83800

c. Prepare the financing activities section of the company's statement of cash flows for the year.

Cash flow from financing activities
Repaid bonds payable -64200
Issue common stock 41200
Dividend paid -4300
Net cash flow from financing activities -27300

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