Question

A comparative balance sheet for Corona Co is presented below.

	December 31
Assets	2020		2019
Cash	$140,000		$  50,000
Accounts receivable	160,000		140,000
Inventory	340,000		378,000
Land	140,000		220,000
Equipment	600,000		400,000
Accumulated depreciation–equipment	(160,000)		(90,000)
Total	$1,220,000		$1,098,000
Liabilities and Stockholders’ Equity
Accounts payable	$ 70,000		$ 100,000
Bonds payable	300,000		100,000
Common stock ($1 par)	328,000		340,000
Retained earnings	522,000		558,000
Total	$1,220,000		$1,098,000

Additional information:

1.   Net income for 2020 was $300,000; there were no gains or losses.

2.   Cash dividends of $80,000 were declared and paid.

3.   Bonds payable of $100,000 were retired.

Instructions:

Compute each of the following:

1.   Net cash provided by operating activities

2.   Net cash provided (used) by investing activities

3.   Net cash provided (used) by financing activities

Answer 1

1.

Net cash provided by operating activities
Net income	300,000
Depreciation expense	70,000
Accounts receivable increase	-20,000
Inventory decrease	38,000
Accounts payable decrease	-30,000
Net cash provided by operating activities	$358,000

2.

Net cash provided (used) by investing activities
Sale of land	80,000
Purchase of equipment	-200,000
Net cash used in investing activites	-$120,000

3.

Net cash provided (used) by financing activities
Cash dividend paid	-80,000
Retirement of bonds payable	-100,000
Purchase of treasury stock	-12,000
Issue of bonds payable	300,000
Net cash provided by financing activities	$108,000