Question No. 1 Cash Flow Statement The comparative balance sheets of Kennewick Inc. are shown below: Balance Sheet December 31 2019 2020 ∆ Cash $ 430,000 $ 300,000 (130,000) Accounts receivable 820,000 900,000 80,000 Inventory 975,000 1,100,000 125,000 Capital assets 5,200,000 5,800,000 600,000 Accumulated amortization (3,825,000) (4,025,000) (200,000) Capital assets-net 1,375,000 1,775,000 400,000 Total assets $ 3,600,000 $ 4,075,000 Accounts payable $ 955,000 $ 900,000 (55,000) Accrued liabilities 145,000 152,000 7,000 Dividend Payable - 8,000 8,000 Bonds payable 1,300,000 1,000,000 (300,000) Mortgage payable 500,000 800,000 300,000 Common stocks 450,000 740,000 290,000 Retained earnings 250,000 475,000 225,000 Total liabilities and stockholders’ equity $ 3,600,000 $ 4,075,000 Additional information: On April 30, 2020, Kennewick sold capital assets that cost $140,000, with a book value of $90,000, for $85,000. On July 1, 2020, Kennewick issued a stock dividend valued at $40,000 to shareholders of record on June 20, 2020. On July 15, 2020, Kennewick issued common stock for capital assets. The common stocks had a current market value of approximately $50,000. On September 10, 2020, bonds with a net book value of $300,000 were retired for $297,000. On December 1, 2020, Kennewick declared cash dividends of $20,000. Required: Prepare a cash flow statement for the year ending December 31, 2020. Use the indirect method to report the operating activities.

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 No. 1 Cash Flow Statement

The comparative balance sheets of Kennewick Inc. are shown below:

Balance Sheet December 31	2019	2020	∆
Cash	$ 430,000	$ 300,000	(130,000)
Accounts receivable	820,000	900,000	80,000
Inventory	975,000	1,100,000	125,000
Capital assets	5,200,000	5,800,000	600,000
Accumulated amortization	(3,825,000)	(4,025,000)	(200,000)
Capital assets-net	1,375,000	1,775,000	400,000
Total assets	$ 3,600,000	$ 4,075,000

Accounts payable	$ 955,000	$ 900,000	(55,000)
Accrued liabilities	145,000	152,000	7,000
Dividend Payable	-	8,000	8,000
Bonds payable	1,300,000	1,000,000	(300,000)
Mortgage payable	500,000	800,000	300,000
Common stocks	450,000	740,000	290,000
Retained earnings	250,000	475,000	225,000
Total liabilities and stockholders’ equity	$ 3,600,000	$ 4,075,000

Additional information:

On April 30, 2020, Kennewick sold capital assets that cost $140,000, with a book value of $90,000, for $85,000.
On July 1, 2020, Kennewick issued a stock dividend valued at $40,000 to shareholders of record on June 20, 2020.
On July 15, 2020, Kennewick issued common stock for capital assets. The common stocks had a current market value of approximately $50,000.
On September 10, 2020, bonds with a net book value of $300,000 were retired for $297,000.
On December 1, 2020, Kennewick declared cash dividends of $20,000.

Required:

Prepare a cash flow statement for the year ending December 31, 2020. Use the indirect method to report the operating activities.

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