Statements of Financial Position 2020 2019Cash$125 $80 Accounts receivable 68 48 Merchandise inventory 49 56 Long-term investments - 42 Property, plant, and equipment 215 178 Accumulated depreciation (57) (72)Total assets$400 $332 Accounts payable$48 62 Income taxes payable 5 6 Long-term borrowings 111 61 Contributed capital 180 160 Retained earnings 56 43 Total liabilities and shareholders’ equity$400 $332 Statement of EarningsSales$200 Cost of sales (120) Gross profit 80 Depreciation expense (10) Other operating expenses (51) Earnings from operations 19 Gain on sale of investments 6 Loss on sale of equipment (2) Earnings before income tax 23 Income tax expense 6 Net earnings$17 Additional information is as follows:Old equipment was sold for cash during 2020. It had an original cost of $48 and an accumulated depreciation of $25.A new building was acquired during the year in exchange for a long-term note for $50, payable in five years. In addition, new equipment was purchased for cash.4. Based on your answers to (1.) and (2.) above, determine the net cash flow from financing activities. (Hint: This can be done without preparing the financing activities section of the statement.) (Enter your answer in millions.) LAPORTE INC.Statement of Cash Flows (Partial)For the Year Ended December 31, 2020Cash flows from investing activities:Purchase of equipmentSale of equipmentSale of long-term investmentNet cash flow from investing activities$$(35)214834 LAPORTE INC.Statement of Cash Flows (Partial)For the Year Ended December 31, 2020Cash flows from operating activities:Net earningsAdd (deduct) items not affecting cash:Decrease in accounts payableDecrease in income tax payableDecrease in merchandise inventoryDepreciation expenseGain on sale of investmentsIncrease in accounts receivableLoss on sale of equipmentNet cash used for operating activities17(14)(1)710(6)(20)2(5)

Cash flow from financing activities can be defined as one of the sections of the cash flow statement…

Answered: Statements of Financial Position…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 32BE

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Question

Statements of Financial Position
	2020		2019
Cash	$	125		$	80
Accounts receivable		68			48
Merchandise inventory		49			56
Long-term investments		-			42
Property, plant, and equipment		215			178
Accumulated depreciation		(57	)		(72	)
Total assets	$	400		$	332
Accounts payable	$	48			62
Income taxes payable		5			6
Long-term borrowings		111			61
Contributed capital		180			160
Retained earnings		56			43
Total liabilities and shareholders’ equity	$	400		$	332
Statement of Earnings
Sales	$	200
Cost of sales		(120	)
Gross profit		80
Depreciation expense		(10	)
Other operating expenses		(51	)
Earnings from operations		19
Gain on sale of investments		6
Loss on sale of equipment		(2	)
Earnings before income tax		23
Income tax expense		6
Net earnings	$	17

Additional information is as follows:

Old equipment was sold for cash during 2020. It had an original cost of $48 and an accumulated depreciation of $25.
A new building was acquired during the year in exchange for a long-term note for $50, payable in five years. In addition, new equipment was purchased for cash.

4. Based on your answers to (1.) and (2.) above, determine the net cash flow from financing activities. (Hint: This can be done without preparing the financing activities section of the statement.) (Enter your answer in millions.)

LAPORTE INC.
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2020
Cash flows from investing activities:
Purchase of equipment
Sale of equipment
Sale of long-term investment
Net cash flow from investing activities
$
$
(35)
21
48
34

LAPORTE INC.
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2020
Cash flows from operating activities:
Net earnings
Add (deduct) items not affecting cash:
Decrease in accounts payable
Decrease in income tax payable
Decrease in merchandise inventory
Depreciation expense
Gain on sale of investments
Increase in accounts receivable
Loss on sale of equipment
Net cash used for operating activities
17
(14)
(1)
7
10
(6)
(20)
2
(5)

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