Question

The Comparative Balance Sheet of XYZ Inc. for December 31, 2019 and 2018 is shown as...

The Comparative Balance Sheet of XYZ Inc. for December 31, 2019 and 2018 is shown as follows:
12/31/19 12/31/18
Assets
Cash $625,760 $585,920
Accounts Receivable 227,840 208,960
Inventories $641,760 $617,120
Investments 0 240,000
Land 328,000 0
Equipment 705,120 553,120
Accumulated Depreciation-equipment (166,400) (148,000)
Total Assets $2,362,080 $2,057,120
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) $424,480 $404,960
Accrued expenses payable (operating expenses) 42,240 52,640
Dividends payable 24,000 19,200
Common Stock, $4 par 150,000 100,000
Paid In Capital – common stock 417,500 280,000
Retained earnings 1,303,860 1,200,320
Total Liabilities and Stockholders’ equity 2,362,080 2,057,120
Additional data obtained from an examination of the accounts in the ledger for 2019 are as follows:
a) The Investments were sold for $280,000 cash.
b) Equipment and land were acquired for cash
c) The common stock was issued for cash
d) There was a $199,540 credit to Retained Earnings for net income
e) There was a $96,000 debit to Retained Earnings for cash dividends declared
Instructions:
Prepare a statement of cash flows using the indirect method.
Business   Accounting   
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Answer #1

Answer:

XYZ Inc.
Statement of cash flows
For the year ended Decemeber 31,2019
Cash flows from Operating activities
Net income 199540
Adjustments to reconcile net income to
net cash flows from operating activitites
Depreciation expense 18400
Gain on sale of investements -40000
Increase in accounts receivable -18880
Increase in inventory -24640
Increase in accounts payable 19520
Decrease in accrued expenses payable -10400
Net cash flows from operating activities 143540
Cash Flows from Investing Activities
Purchase of Land -328000
Purchase of Equipment -152000
Sale of Investments 280000
Net cash flows used in investing activities -200000
Cash Flows from Financing Activities
Issue of common stock 187500
Payment of cash dividends -91200
Net Cash Flows from Financing Activities 96300
Net increase (decrease) in cash 39840
Cash at the beginning of period 585920
Cash at the end of period 625760
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