Answer Happy

Dec. 31, 2021 Assets Cash 658,920 Accounts Receivable 992,640 Inventories 1,294,400 Investments 0 Land 970,000 Equipment 1,324,000 Accumulated Depreciation - Equipment (481,500) Total assets $4,758,460 $1,060,000 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses).... Dividends payable 87,800 100,800 Common stock, $5 par 130,000 Paid-in-capital in excess of par-common stock 950,000 Retained earnings 2,429,860 Total liabilities and stockholders' equity 4,758,460 The income statement for the year ended December 31, 2021, is as follows: Sales.................. ************** Cost of goods sold... Gross profit............. Operating expenses: Depreciation expense..... Other operating expense.... Total operating expenses..... Operating income.... Other revenue: Gain on sale of investments.... Income before income tax......... Income tax expense....... Net income................. ********* ************ ****** ***** ********* ***** ************** Dec. 31, $113,100 1,344,840 673,100 924,400 1,363,800 432,000 0 984,000 (368,400) $4,008,900 $966,600 79,200 91,200 30,000 450,000 2,391,900 4,008,900 $4,512,000 (2,352,000) $2,160,000 (1,457,940) $702,060 163,000 865,060 (299,100) $565,960
Additional data obtained from an examination of the accounts in the ledger for 2020 are as follows: a. Equipment and land were acquired for cash. b. There were no disposals of equipment during the year. c. The investments were sold for $595,000 cash. d. The common stock was issued for cash. e. There was $528,000 debit to Retained Earnings for cash dividends declared. Instructions: Prepare a statement of cash flows, using the (a) direct method and (b) indirect method of presenting cash flow from operating activities.
1) Cash collected from customers: Sales..... Minus Increase in Accounts Receivable................. 2) Purchases: Cost Of Goods Sold.. Minus decrease in Inventory..... 3) Cash paid for purchases: Purchases... Minus Increase in Accounts Payable... 4) Cash operating expenses: Operating expenses... Minus Increase in Accrued Operating Expenses.......... Cash collected from customers....... Minus cash paid for purchases.......... Minus cash operating expenses.. Minus payment of income taxes.... - Cash flow from operating activities...... Cash Flow from Investing Activities: Purchase of equipment. Purchase of land.. Sale of investments..........
Net cash flow from investing activities Cash Flow from Financing Activities: Issue of common stock............. Payment of dividend........ with A Net cash flow from financing activities....... Cash Flow from Operating Activities (Indirect Method) Net Income.............. Plus Depreciation............ Minus gain on sale of investments...... Minus increase in accounts receivable.................. Plus decrease in inventories... Plus increase in accounts payable.. Plus increase in accrued expenses............ = Cash flow from operating activities.....