2020 2019 Cash $42,300 $34,000 Accounts Receivable 70,600 59,600 Inventory 30,000 23,900 Equity investments 22,500 38,700 Machinery 29,700 18,600 Buildings 67,900 56,600 Land 7,500 7,500 $270,500 $238,900 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 Accumulated Depreciation—Machinery 5,700 2,300 Accumulated Depreciation—Buildings 13,600 8,900 Accounts Payable 34,800 24,500 Accrued Payables 3,300 2,700 Long-Term Notes Payable 21,200 31,200 Common Stock, no-par 150,000 125,000 Retained Earnings 39,700 42,800 $270,500 $238,900 Additional data (ignoring taxes): 1. Net income for the year was $43,100. 2. Cash dividends declared and paid during the year were $21,200. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,700. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. Flounder’s 2020 income statement follows (ignoring taxes). Sales revenue $544,200 Less: Cost of goods sold 383,000 Gross margin 161,200 Less: Operating expenses (includes $8,850 depreciation and $5,733 bad debts) 121,000 Income from operations 40,200 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800) 2,900 Net income $43,100
Comparative
FLOUNDER INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2020 AND 2019
December 31
Debit Accounts
2020 2019
Cash $42,300 $34,000
Accounts Receivable 70,600 59,600
Inventory 30,000 23,900
Equity investments 22,500 38,700
Machinery 29,700 18,600
Buildings 67,900 56,600
Land 7,500 7,500
$270,500 $238,900
Credit Accounts
Allowance for Doubtful Accounts $2,200 $1,500
Accumulated
Accumulated Depreciation—Buildings 13,600 8,900
Accounts Payable 34,800 24,500
Accrued Payables 3,300 2,700
Long-Term Notes Payable 21,200 31,200
Common Stock, no-par 150,000 125,000
$270,500 $238,900
Additional data (ignoring taxes):
1. Net income for the year was $43,100.
2. Cash dividends declared and paid during the year were $21,200.
3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,700. No unrealized gains and losses were recorded on these investments in 2020.
5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150.
Flounder’s 2020 income statement follows (ignoring taxes).
Sales revenue $544,200
Less: Cost of goods sold 383,000
Gross margin 161,200
Less: Operating expenses (includes $8,850 depreciation and $5,733
Income from operations 40,200
Other: Gain on sale of investments $3,700
Loss on sale of machinery (800) 2,900
Net income $43,100
(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Net cash flow from operating activities
$
(b) Prepare a statement of
FLOUNDER INC.
Statement of Cash Flows
(Indirect Method)
$
Adjustments to reconcile net income to
$
$
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