Condensed financial data of Pearl Company for 2020 and 2019 are presented below.Additional information:During the year, $70 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 PEARL COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2020Sales revenue$6,810Cost of goods sold4,680Gross margin2,130Selling and administrative expenses920Income from operations1,210Other revenues and gainsGain on sale of investments80Income before tax1,290Income tax expense530Net income760Cash dividends260Income retained in business$500 PEARL COMPANYCOMPARATIVE BALANCE SHEETAS OF DECEMBER 31, 2020 AND 201920202019Cash$1,810$1,120Receivables1,7901,330Inventory1,5701,940Plant assets1,8701,740Accumulated depreciation(1,230 )(1,150 )Long-term investments (held-to-maturity)1,3001,440$7,110$6,420Accounts payable$1,220$910Accrued liabilities200260Bonds payable1,3701,550Common stock1,8601,740Retained earnings2,4601,960$7,110$6.420

Proceeds from sale of long term investment = 1,440 - 1,300 + 80 = 220Cash Flow Statement Particulars Detail ( In $) Amount ( In $) Cash Flow From Operating Activities : Net income as per Statement of Profit & Loss 760 Adjustment : for non cash & non operating items : Add : Depreciation (1,230 - 1,150 ) 80 Less : Gain on sale of investment ( 80 ) Net operating profit before working capital changes 760 Add : Decrease in current asset - Inventory ( 1,940 - 1,570 ) 370 Add : Increase in current liabilities - Accounts Payable ( 1,220 - 910) 310 Less : Increase in current asset - Receivables ( 1,790 - 1,330 ) ( 460 ) Less : Decrease in current liabilities - Accrued Liabilities ( 260 - 200 ) ( 60 ) Net cash flow from operating activities 910 Cash Flow From Investing Activities : Sale of long term investment 220 Net cash flow from investing activities 220 Cash Flow From Financing Activities : Repayment of bonds payable ( 1,550 - 1,370 ) ( 180 ) Dividend paid ( 260 ) Net cash used in financing activities ( 440 ) Increase in cash & cash equivalent 690 Add : Beginning balance of cash & cash equivalent 1,120 Closing balance of cash & cash equivalent 1,810

Business

Accounting

PEARL COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019 Cash $1,810 $1,120 Receivables 1,790 1,330 Inventory 1,570 1,940 Plant assets 1,870 1,740 Accumulated depreciation (1,230 ) (1,150 ) Long-term investments (held-to-maturity) 1,300 1,440 $7,110 $6,420 Accounts payable $1,220 $910 Accrued liabilities 200 260 Bonds payable 1,370 1,550 Common stock 1,860 1,740 Retained earnings 2,460 1,960 $7,110 $6,420

PEARL COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 2019 Cash $1,810 $1,120 Receivables 1,790 1,330 Inventory 1,570 1,940 Plant assets 1,870 1,740 Accumulated depreciation (1,230 ) (1,150 ) Long-term investments (held-to-maturity) 1,300 1,440 $7,110 $6,420 Accounts payable $1,220 $910 Accrued liabilities 200 260 Bonds payable 1,370 1,550 Common stock 1,860 1,740 Retained earnings 2,460 1,960 $7,110 $6,420

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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