Question

Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) 2021 2020 Assets Cash $ 480 $ 250 Accounts receivable 550 290 Inventory 700 400 Land 700 650 Building 800 800 Less: Accumulated depreciation (250 ) (215 ) Equipment 3,000 2,750 Less: Accumulated depreciation (355 ) (320 ) Patent 1,000 1,150 $ 6,625 $ 5,755 Liabilities Accounts payable $ 800 $ 550 Accrued liabilities 250 220 Lease liability—land 130 0 Shareholders' Equity Common stock 2,660 2,500 Paid-in capital—excess of par 600 560 Retained earnings 2,185 1,925 $ 6,625 $ 5,755 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues Sales revenue $ 3,020 Gain on sale of land 80 $ 3,100 Expenses Cost of goods sold 1,000 Depreciation expense—building 35 Depreciation expense—equipment 440 Loss on sale of equipment 20 Amortization of patent 150 Operating expenses 600 2,245 Net income $ 855 Additional information from the accounting records: Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2021. During 2021, equipment with a cost of $450,000 (90% depreciated) was sold. The statement of shareholders’ equity reveals reductions of $200,000 and $395,000 for stock dividends and cash dividends, respectively. Required: Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10).) Amounts to be deducted should be indicated with a minus sign.)

METAGROBOLIZE INDUSTRIES

Statement of Cash Flows

For year ended December 31, 2021($ in 000s)

Cash flows from operating activities:

Net income

Adjustments for noncash effects:

Changes in operating assets and liabilities:

Net cash flows from operating activities

Cash flows from investing activities:

Net cash flows from investing activities

Cash flows from financing activities:

Net cash flows from financing activities

Net increase in cash

Cash balance, January 1

Cash balance, December 31

Noncash investing and financing activities:

Answer 1

Answer-

METAGROBOLIZE INDUSTRIES
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2021
Particulars		Amount
		$ in thousands
Cash flow from operating activities
Net Income		855
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation	($35+$440)	475
Loss on sale of equipment		20
Amortization expense-Patent		150
Gain on sale of land		-80
Change in operating assets & liabilities
Increase in accounts receivable		-260
Increase in inventory		-300
Increase in accounts payable		250
Increase in accrued liabilities		30
Net cash flow from operating activities (a)		1140
Cash Flow from Investing activities
New equipment purchased	($3000+$450-$2750)	-700
Old equipment sold		25
Land sold		160
Net cash Flow from Investing activities (b)		-515
Cash Flow from Financing activities
Cash dividends paid		-395
Net cash Flow from Financing activities (c)		-395
Net Change in cash c=a+b+c		230
Beginning cash balance		250
Closing cash balance		480