Question

Selected financial statement information and additional data for Shaheen Co. is presented below. Prepare a statement of cash flows for the year ending December 31, 2020.

                                                                                                December 31

                                                                                    2019                            2020

Cash........................................................ $42,000                       $60,000

Accounts receivable (net)........................     84,000                       144,200

Inventory.................................................. 168,000                       206,600

Land.........................................................     58,800                         26,000

Equipment............................................... 504,000                       789,600

TOTAL......................................... $856,800                 $1,226,400

Accumulated depreciation....................... $84,000                     $110,600

Accounts payable....................................     50,400                         91,000

Notes payable - short-term......................     67,200                         29,400

Notes payable - long-term....................... 168,000                       302,400

Common stock......................................... 420,000                       487,200

Retained earnings...................................     67,200                       205,800

TOTAL......................................... $856,800                 $1,226,400

Additional data for 2020:

1.   Net income was $230,200;             

2.   Land was sold at its original cost;   

3. Dividends of $91,600 were paid.

4.   Equipment was purchased for $84,000 cash.

5.   A long-term note for $201,600 was used to pay for an equipment purchase.

6.   Common stock was issued to pay a $67,200 long-term note payable.

Answer 1

Ans: Statement of Cash flows

Particulars	Amount	Amount
Cash flow from operating Activities
Net income		230,200
Adjustments for reconciling net income to net cash flows from operating Activities
Add:
Depreciation	26,600
Increase in accounts Payable	40,600
Less:
Increase in accounts Receivable	(60,200)
Increase in inventory	(38,600)
Decrease in notes payable	(37,800)
Long term note payable{302,400-168,000-201,600+67,200)	0
Net cash Flow from Operating Activities		(96,000)
		160,800
Cash flow from investing Activities
Land Sold	32,800
Equipment Purchased	(84,000)
cash flow from financing Activities		(51,200)
Dividends Paid		(91,600)
Net decrease/ Increase in cash		18,000
Add: Beginning Balance		42,000
Closing Balance		60,000