Culver Inc. applies ASPE and had the following statement of financial position at the end of operations for 2019: CULVER INC. Statement of Financial Position December 31, 2019 Cash $50,500 Accounts payable $ 93,000 Accounts receivable 90,000 Long-term debt 85,000 Inventory 82,000 Common shares 100,000 Machinery (net) 125,000 Retained earnings 89,500 Trademarks 20,000 $367,500 $367,500 During 2020, the following occurred: 1. Jia Inc. sold some of its trademarks. The trademarks had an unlimited useful life and a cost of $10,000. They were sold for proceeds of $19,500. 2. Machinery was purchased in exchange for long-term debt of $40,000. 3. Long-term debt in the amount of $16,000 was retired before maturity by paying $16,000 cash. 4. An additional $11,500 in common shares was issued. 5. Dividends totalling $13,200 were declared and paid to shareholders. Dividends paid are treated as financing activities. 6. Net income for 2020 was $44,000 after allowing for depreciation of $19,000. 7. Machinery with a carrying value of $18,000 was sold at a gain of $7,000. 8. At December 31, 2020, Cash was $67,800; Accounts Receivable was $111,000; Accounts Payable was $83,000 and Inventory increased to $107,000. Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method.

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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Culver Inc. applies ASPE and had the following statement of financial position at the end of operations for 2019:

CULVER INC. Statement of Financial Position December 31, 2019
Cash	$50,500	Accounts payable	$ 93,000
Accounts receivable	90,000	Long-term debt	85,000
Inventory	82,000	Common shares	100,000
Machinery (net)	125,000	Retained earnings	89,500
Trademarks	20,000
	$367,500		$367,500

During 2020, the following occurred:

1.		Jia Inc. sold some of its trademarks. The trademarks had an unlimited useful life and a cost of $10,000. They were sold for proceeds of $19,500.
2.		Machinery was purchased in exchange for long-term debt of $40,000.
3.		Long-term debt in the amount of $16,000 was retired before maturity by paying $16,000 cash.
4.		An additional $11,500 in common shares was issued.
5.		Dividends totalling $13,200 were declared and paid to shareholders. Dividends paid are treated as financing activities.
6.		Net income for 2020 was $44,000 after allowing for depreciation of $19,000.
7.		Machinery with a carrying value of $18,000 was sold at a gain of $7,000.
8.		At December 31, 2020, Cash was $67,800; Accounts Receivable was $111,000; Accounts Payable was $83,000 and Inventory increased to $107,000.

Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method.

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