Question

Marigold Corp. Comparative Balance Sheets December 31 Assets 2020 2019 Cash $ 72,800 $ 33,200 Accounts receivable 86,500 70,700 Inventory 170,200 187,000 Land 72,700 100,700 Equipment 260,700 200,600 Accumulated depreciation—equipment (65,700 ) (33,500 ) Total $597,200 $558,700 Liabilities and Stockholders’ Equity Accounts payable $ 35,400 $ 46,500 Bonds payable 149,800 203,300 Common stock ($1 par) 218,000 173,000 Retained earnings 194,000 135,900 Total $597,200 $558,700 Additional information: 1. Net income for 2020 was $103,600. 2. Cash dividends of $45,500 were declared and paid. 3. Bonds payable amounting to $53,500 were redeemed for cash $53,500. 4. Common stock was issued for $45,000 cash. 5. No equipment was sold during 2020, but land was sold at cost. Prepare a statement of cash flows for 2020 using the indirect method.

Answer 1

Answer:

See the explanation below.

Explanation:

                                           Marigold Corp.

                          Statement of cash flows for 2020

Details                                                                     $                     $

Net income                                                        103,600

Depreciation (65,700 - 32,500)                        32,200

Increase in receivables (86,500 - 70,700)      (15,800)

Decrease in inventory (170,200 - 187,000)       16,800

Decrease in payables (35,400 - 46,500)         (11,100)

Net cash from operating activities                                            125,700

Cash flows from investing activities:

Equipment purchase (260,700 - 200,600)     (60,100)

Land sales (100,700 - 72,700)                           28,000

Net cash flows from Investing activities                                  (32,100)

Cash flows from financing activities:

Dividend paid                                                    (45,500)

Bond redeemed                                                (53,500)

Common stock issued                                       45,000

Net cash from financing activities                                              (54,000)

Increase / (Decrease) in cash                                                         39,600

Beginning cash balance                                                                 33,200

Ending cash balance                                                                      72,800