The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: Service revenue Operating expenses Income before income taxes $ 980, e00 740,000 240,000 60,000 Income tax expense Net income $ 180, e00 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 347,000 128,000 78,e00 14,000 Cash Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable $74,000 104, e00 64,000 23, еее In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 in depreciation expense. Required: 1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. 2. Prepare the cash flows from operating activities section of Diversified's 2021 statement of cash flows using the indirect method.
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: Service revenue Operating expenses Income before income taxes $ 980, e00 740,000 240,000 60,000 Income tax expense Net income $ 180, e00 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 347,000 128,000 78,e00 14,000 Cash Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable $74,000 104, e00 64,000 23, еее In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 in depreciation expense. Required: 1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. 2. Prepare the cash flows from operating activities section of Diversified's 2021 statement of cash flows using the indirect method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required 1
Required 2
Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting
operating activities. (Amounts to be deducted should be indicated with a minus sign.)
DIVERSIFIED PORTFOLIO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash flows from operating activities:
Net cash flows from operating activities
2$
Cash flows from investing activities:
Net cash flows from investing activities
Cash flows from financing activities:
Net cash flows from financing activities
Increase in cash
Cash and cash equivalents, January 1
Cash and cash equivalents, December 31
$
Transcribed Image Text:The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
$ 980,000
740, 000
240, 000
60,000
Service revenue
Operating expenses
Income before income taxes
Income tax expense
Net income
$ 180,000
The following balance sheet information also is available:
12/31/2021 12/31/2020
$ 74,000
104, 000
64,000
23,000
Cash
$ 347,000
Accounts receivable
Accrued liabilities (for operating expenses)
Income taxes payable
128,000
78,000
14,000
In addition, the following transactions took place during the year:
1. Common stock was issued for $108,000 in cash.
2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000.
3. $84,000 in cash dividends was paid to shareholders.
4. The company has no outstanding debt, other than those payables listed above.
5. Operating expenses include $34,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating
activities.
2. Prepare the cash flows from operating activities section of Diversified's 2021 statement of cash flows using the indirect method.
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