Question

The comparative balance sheets of Metlock Inc. at the beginning and the end of the year 2020 are as follows.

METLOCK INC. BALANCE SHEETS
		Dec. 31, 2020				Jan. 1, 2020				Inc./Dec.
Assets
Cash			$ 47,720				$ 15,720			$32,000	Inc.
Accounts receivable			95,830				90,110			5,720	Inc.
Equipment			43,830				24,110			19,720	Inc.
Less: Accumulated Depreciation-Equipment			21,830				11,000			10,830	Inc.
Total			$165,550				$118,940
Liabilities and Stockholders’ Equity
Accounts payable			$ 24,830				$ 17,110			7,720	Inc.
Common stock			102,720				82,110			20,610	Inc.
Retained earnings			38,000				19,720			18,280	Inc.
Total			$165,550				$118,940

Net income of $48,830 was reported, and dividends of $30,550 were paid in 2020. New equipment was purchased and none was sold.

Prepare a statement of cash flows for the year 2020.

Answer 1

METLOCK INC.
Statement of Cash Flows
For year ended December 31,2020
Cash flows from operating activities:
Net income		$48,830
Adjustments:
Depreciation expense	$10,830
Increase in accounts receivable	($5,720)
Increase in accounts payable	$7,720
		$12,830
Net cash flows from operating activities (i)		$61,660
Cash flows from investing activities:
Purchase of equipment	($19,720)
Net cash flows from inveSting activities (ii)		($19,720)
Cash flows from financing activities:
Issuance of common shares	$20,610
Payment of cash dividends	($30,550)
Net cash flows from financing activities (iii)		($9,940)
Net increase(decrease) in cash (i+ii+iii)		$32,000
Cash balance, January 1, 2020		$15,720
Cash balance, December 31, 2020		$47,720