Answered: Condensed financial data of Waterway…

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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Question

Condensed financial data of Waterway Company for 2020 and 2019 are presented below.

WATERWAY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
	2020		2019
Cash	$1,820			$1,130
Receivables	1,730			1,280
Inventory	1,590			1,870
Plant assets	1,940			1,690
Accumulated depreciation	(1,220	)		(1,180	)
Long-term investments (held-to-maturity)	1,300			1,450
	$7,160			$6,240

Accounts payable	$1,200			$920
Accrued liabilities	190			230
Bonds payable	1,430			1,530
Common stock	1,930			1,710
Retained earnings	2,410			1,850
	$7,160			$6,240

WATERWAY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$6,840
Cost of goods sold		4,630
Gross margin		2,210
Selling and administrative expenses		930
Income from operations		1,280
Other revenues and gains
Gain on sale of investments		90
Income before tax		1,370
Income tax expense		550
Net income		820
Cash dividends		260
Income retained in business		$560

Additional information:

During the year, $60 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

During the year, $60 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or
in parenthesis eg. (15,000),)
WATERWAY COMPANY
Statement of Cash Flows
For the Year Ended December 31. 2020
(Indirect Method)
Cash Flows from Operatine Activities
Net Income
Adjustments to reconile net income to
Net Cash Used bv Operatine Activities
Deoreciation Expense
Increase in Accounts Receivable
Decrease in Inventorv
Decrease in Accounts Pavable
Decrease in Accrued Liabilities
Net Cash Provided bv Operatine Activities
Cash Flows from Investine Activities
$

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