Question

A comparative balance sheet for Blossom Corporation is presented as follows. December 31 Assets 2020 2019 Cash $ 72,800 $ 22,000 Accounts receivable 83,260 67,460 Inventory 181,260 190,460 Land 72,260 111,460 Equipment 261,260 201,460 Accumulated Depreciation-Equipment (70,260 ) (43,460 ) Total $600,580 $549,380 Liabilities and Stockholders' Equity Accounts payable $ 35,260 $ 48,460 Bonds payable 150,000 200,000 Common stock ($1 par) 214,000 164,000 Retained earnings 201,320 136,920 Total $600,580 $549,380 Additional information: 1. Net income for 2020 was $127,520. No gains or losses were recorded in 2020. 2. Cash dividends of $63,120 were declared and paid. 3. Bonds payable amounting to $50,000 were retired through issuance of common stock. (a) Prepare a statement of cash flows for 2020 for Blossom Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) BLOSSOM CORPORATION Statement of Cash Flows $ Adjustments to reconcile net income to $ $ Issued common stock to retire $ of bonds outstanding

Answer 1

BLOSSOM CORPORATION STATEMENT OF CASH FLOW FOR THE YEAR ENDED DECEMBER 31,2020
Operating activities
Net income	127520
adjustment to reconcile net income to cash flow from operating activities
Depreciation expense	26800
Increase in accounts receivable {83260-67460}	-15800
Decrease in inventory {181260-190460}	9200
Decrease in accounts payable {35260-48460}	-13200
Net cash flow from operating activities		134520
Investing activities
sales of land {111460-72260}	39200
purchase of equipment {261260-201460}	-59800
Net cash flow from investing activities		-20600
Financing activities
dividend paid	-63120
Net cash flow from financing activities		-63120
Net increase/ (decrease) in cash during the year		50800
cash at beginning		22000
Cash at end		72800

#

a)Depreciation expense =Accumulated depreciation for 2020 - Accumulated depreciation for 2019

                = 70260-43460

                = 26800