Preparing a Cash Flow Statement—Indirect Method Sketchers Corporation’s recent comparative balance sheet and income statement follow. Balance Sheets, December 31 2019 2020 Assets Cash and cash equivalents $12,800 $54,400 Accounts receivable (net) 16,000 28,800 Inventory 32,000 38,400 Investment, long-term 6,400 Plant assets 96,000 150,400 Accumulated depreciation (16,000) (22,400) Total assets $147,200 $249,600 Liabilities and Stockholders’ Equity Accounts payable $9,600 $16,000 Notes payable, short-term (nontrade) 12,800 9,600 Notes payable, long-term 32,000 57,600 Common stock, no-par 80,000 128,000 Retained earnings 12,800 38,400 Total liabilities andstockholders’ equity $147,200 $249,600 Income Statement, For Year Ended December 31 2020 Sales revenue $480,000 Cost of goods sold (288,000) Gross margin 192,000 Depreciation expense (6,400) Other operating expenses (104,400) Net income $83,200 Additional Information 1. Sold the long-term investment at cost, for cash. 2. Declared and paid a cash dividend of $22,400. 3. Purchased plant assets that cost $54,400; gave a $38,400 long-term note payable and paid $16,000 cash. 4. Paid a $12,800 long-term note payable by issuing common stock; market value, $12,800. 5. Issued a stock dividend, $35,200. Required Prepare the statement of cash flows for Sketchers Corporation for the year ended December 31, 2020, assuming the indirect method in presenting cash flows from operating activities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Preparing a Cash Flow Statement—Indirect Method

Sketchers Corporation’s recent comparative balance sheet and income statement follow.

Balance Sheets, December 31	2019	2020
Assets
Cash and cash equivalents	$12,800	$54,400
Accounts receivable (net)	16,000	28,800
Inventory	32,000	38,400
Investment, long-term	6,400
Plant assets	96,000	150,400
Accumulated depreciation	(16,000)	(22,400)
Total assets	$147,200	$249,600
Liabilities and Stockholders’ Equity
Accounts payable	$9,600	$16,000
Notes payable, short-term (nontrade)	12,800	9,600
Notes payable, long-term	32,000	57,600
Common stock, no-par	80,000	128,000
Retained earnings	12,800	38,400
Total liabilities andstockholders’ equity	$147,200	$249,600

Income Statement, For Year Ended December 31	2020
Sales revenue	$480,000
Cost of goods sold	(288,000)
Gross margin	192,000
Depreciation expense	(6,400)
Other operating expenses	(104,400)
Net income	$83,200

Additional Information

1. Sold the long-term investment at cost, for cash.

2. Declared and paid a cash dividend of $22,400.

3. Purchased plant assets that cost $54,400; gave a $38,400 long-term note payable and paid $16,000 cash.

4. Paid a $12,800 long-term note payable by issuing common stock; market value, $12,800.

5. Issued a stock dividend, $35,200.

Required

Prepare the statement of cash flows for Sketchers Corporation for the year ended December 31, 2020, assuming the indirect method in presenting cash flows from operating activities.

Statement of Cash Flows For the Year Ended December 31, 2020
Cash flows from operating activities
Net income	Answer
Adjustments:
Answer	Answer
Increase in accounts receivable, net	Answer
Increase in inventory	Answer
Increase in accounts payable	Answer
Net cash provided (used) by operating activities	Answer
Cash flows from investing activities
Sale of long-term investment	Answer
Answer	Answer
Net cash provided (used) by investing activities	Answer
Cash flows from financing activities
Answer	Answer
Cash paid for dividends	Answer
Net cash provided (used) by financing activities	Answer
Net increase in cash and cash equivalents during 2020	Answer
Cash and cash equivalents, January 1, 2020	Answer
Cash and cash equivalents, December 31, 2020	Answer
Noncash Disclosure
Exchanged plant assets for long-term note	Answer
Issuance of common stock for long-term note payment	Answer

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