Situation: The operation of Isabel’s Bar, a small food and beverage service operation, are becoming more complex. Isabel Feliz, the owner has asked for your help in preparing her statement of cash flows. She is able to present you with condensed balance sheets and some additional information.The condensed balance sheets of the Isabell’s Bar are as follows:Isabell’s BarCondensed Balance Sheets December 31, 2019 and 2020Assets20192020Current Assets: Cash15,00015,000Marketable Securities5,0005,000Accounts Receivable14,00015,000Inventory20,00019,000Total Current Assets54,00054,000Investments10,00010,000Equipment320,000320,000Accumulated Depreciation(50,000)(50,000)Total Assets334,000334,000Liabilities and Owner’s Equity Current Liabilities Account Payable18,00019,000Dividends Payable20,00020,000Notes Payable(current)20,00020,000Total58,00059,000Long-term Debt160,000160,000Common Stock100,000100,000Retained Earnings16,00016,000Total Liabilities and OE334,000334,000 Additional Information:1.Assume current liabilities are paid on a timely basisCommon Stock of EUR 20,000 was exchanged for equipment in a noncash transactionMarketable securities that cost EUR 5,000 were sold for EUR 10,000The bar’s van, which cost EUR 25,000 was sold at a gain of EUR 5,000. It’s net book value on the date of sale was EUR 10,000.Dividends declared during 2020 totalled EUR 30,000Investments costing EUR 15,000 were sold for EUR 10,000Required:Prepare SCF( Cash flow statement) for Isabell’s Bar 2020 using the indirect method!

The question is related to Cash Flow Statement. The Balance Sheet of 2019 and 2020 is given.

Answered: Situation: The operation of Isabel’s…

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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Situation: The operation of Isabel’s Bar, a small food and beverage service operation, are becoming more complex. Isabel Feliz, the owner has asked for your help in preparing her statement of cash flows. She is able to present you with condensed balance sheets and some additional information.

The condensed balance sheets of the Isabell’s Bar are as follows:

Isabell’s Bar

Condensed Balance Sheets December 31, 2019 and 2020

Assets	2019	2020
Current Assets:
Cash	15,000	15,000
Marketable Securities	5,000	5,000
Accounts Receivable	14,000	15,000
Inventory	20,000	19,000
Total Current Assets	54,000	54,000
Investments	10,000	10,000
Equipment	320,000	320,000
Accumulated Depreciation	(50,000)	(50,000)
Total Assets	334,000	334,000
Liabilities and Owner’s Equity
Current Liabilities
Account Payable	18,000	19,000
Dividends Payable	20,000	20,000
Notes Payable(current)	20,000	20,000
Total	58,000	59,000
Long-term Debt	160,000	160,000
Common Stock	100,000	100,000
Retained Earnings	16,000	16,000
Total Liabilities and OE	334,000	334,000

Additional Information:

1.Assume current liabilities are paid on a timely basis

Common Stock of EUR 20,000 was exchanged for equipment in a noncash transaction
Marketable securities that cost EUR 5,000 were sold for EUR 10,000
The bar’s van, which cost EUR 25,000 was sold at a gain of EUR 5,000. It’s net book value on the date of sale was EUR 10,000.
Dividends declared during 2020 totalled EUR 30,000
Investments costing EUR 15,000 were sold for EUR 10,000

Required:

Prepare SCF( Cash flow statement) for Isabell’s Bar 2020 using the indirect method!

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