Statement of Cash FlowsThe following is a list of the items to be included in the preparation of Warrick Company's 2019 statement of cash flows:Net income, $35,400Payment for purchase of building, $87,000Increase in accounts receivable, $7,200Proceeds from issuance of common stock, $36,400Increase in accounts payable, $4,400Proceeds from sale of land, $8,000Depreciation expense, $19,000Payment of dividends, $32,000Gain on sale of land, $3,500Decrease in inventory, $3,300Payment for purchase of long-term investments, $8,300Amortization of discount on bonds payable, $1,500Proceeds from issuance of note, $16,000Increase in deferred taxes payable, $5,800Equipment acquired by capital lease, $19,500Decrease in salaries payable, $2,600Beginning cash balance, $22,000Required1. Prepare the statement of cash flows. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.WARRICK COMPANYStatement of Cash FlowsFor Year Ended December 31, 2019Operating Activities: Net income $ Adjustment for noncash income items: Add: Depreciation expense Add: Amortization of discount on bonds payable Add: Accumulated depreciation Less: Gain on sale of land Adjustments for cash flow effectsfrom working capital items: Increase in accounts receivable Decrease in inventory Increase in accounts payable Decrease in salaries payable Net cash provided by operating activities $Investing Activities: Payment for purchase of building $ Proceeds from sale of land Payment for purchase of long-term investments Net cash used for investing activities Financing Activities: Proceeds from issuance of common stock $ Proceeds from issuance of note Payment of dividends Net cash provided by financing activities Cash, December 31, 2019 $Cash, January 1, 2019 Cash, December 31, 2019 $ Investing and Financing Activities Not Affecting Cash Investing Activities: Acquisition of equipment under capital lease $Financing Activities: Incurrence of capital lease obligation for equipment Feedback 2. Assume the company's preferred stock has been selling for $120 per share during 2019. How many shares would the company have had to issue to avoid having a decrease in cash during the year? shares

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Answered: 1. Prepare the statement of cash flows.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Statement of Cash Flows

The following is a list of the items to be included in the preparation of Warrick Company's 2019 statement of cash flows:

Net income, $35,400
Payment for purchase of building, $87,000
Increase in accounts receivable, $7,200
Proceeds from issuance of common stock, $36,400
Increase in accounts payable, $4,400
Proceeds from sale of land, $8,000
Depreciation expense, $19,000
Payment of dividends, $32,000
Gain on sale of land, $3,500
Decrease in inventory, $3,300
Payment for purchase of long-term investments, $8,300
Amortization of discount on bonds payable, $1,500
Proceeds from issuance of note, $16,000
Increase in deferred taxes payable, $5,800
Equipment acquired by capital lease, $19,500
Decrease in salaries payable, $2,600
Beginning cash balance, $22,000

Required

1. Prepare the statement of cash flows. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

WARRICK COMPANY
Statement of Cash Flows
For Year Ended December 31, 2019
Operating Activities:
Net income	$
Adjustment for noncash income items:
Add: Depreciation expense
Add: Amortization of discount on bonds payable
Add: Accumulated depreciation
Less: Gain on sale of land
Adjustments for cash flow effects from working capital items:
Increase in accounts receivable
Decrease in inventory
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities		$
Investing Activities:
Payment for purchase of building	$
Proceeds from sale of land
Payment for purchase of long-term investments
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock	$
Proceeds from issuance of note
Payment of dividends
Net cash provided by financing activities
Cash, December 31, 2019		$
Cash, January 1, 2019
Cash, December 31, 2019		$

Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of equipment under capital lease		$
Financing Activities:
Incurrence of capital lease obligation for equipment

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2. Assume the company's preferred stock has been selling for $120 per share during 2019. How many shares would the company have had to issue to avoid having a decrease in cash during the year?

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