Question

Presented below are the 2020 Income Statement and Balance Sheet for Riggins Online Store. Prepare a Cash Flow Statement as of December 31, 2020.

Additional Information for the 2020 fiscal year includes: 1) Cash dividends of $1,000 were declared and paid. 2) Equipment with a cost of $1,500 and accumulated depreciation of $1,000 was sold for $500.

Riggins Online Store
Income Statement
For the Year Ended December 31, 2020
Sales Revenue			$ 14,250
Service Revenue			3,400
	Total Revenue			$ 17,650
Operating Expenses:
	Cost of Goods Sold		5,600
	Depreciation		1,600
	Selling		2,400
	General and administrative		1,500
		Total Operating Expenses		11,100
Operating Income				6,550
Interest Expense				200
Income Before Income Taxes				6,350
Income Tax Expense				2,500
Net Income				$   3,850

Riggins Online Store
Balance Sheet
As of December 31, 2019 and 2020
			2020	2019
Assets
	Cash		$         7,350	$         2,200
	Accounts Receivable		2,500	2,200
	Inventory		4,000	3,000
	Prepaid Rent		150	300
	Plant and Equipment		14,500	12,000
		Less: Accumulated Deprecation	(5,100)	(4,500)
Total Assets			$      23,400	$      15,200
Liabilities and Shareholder's Equity
	Accounts Payable		$         1,400	$         1,100
	Interest Payable		100	-
	Deferred Service Revenue		800	600
	Income Taxes Payable		550	800
	Note Payable, due 12,31, 2023		5,000	-
	Common Stock		10,000	10,000
	Retained Earnings		5,550	2,700
Total Liabilities and Shareholder's Equity			$      23,400	$      15,200

Answer 1

Answer-

RIGGINS ONLINE STORE
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2020
Particulars		Amount
		$
Cash flow from operating activities
Net Income		3850
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		1600
Change in operating assets & liabilities
Increase in accounts receivable		-300
Increase in inventory		-1000
Decrease in prepaid rent		150
Increase in accounts payable		300
Increase in interest payable		100
Increase in deferred service revenue		200
Decrease in income taxes payable		-250
Net cash flow from operating activities (a)		4650
Cash Flow from Investing activities
Equipment purchased		-4000
Equipment sold		500
Net cash Flow from Investing activities (b)		-3500
Cash Flow from Financing activities
Cash dividends paid		-1000
Notes payable issued		5000
Net cash Flow from Financing activities (c)		4000
Net Change in cash c=a+b+c		5150
Beginning cash balance		2200
Closing cash balance		7350