Answer and Explanation:
The preparation of the statement of cash flow is shown below:-
Kay wing, Inc.
Statement of Cash Flows
For the Year Ended December 31,2021
Particulars Amount
Cash flows from operating activities:
Net income $35,500
Adjustment
Depreciation expense $12,000
Changes in current asset and liabilities
Increase in accounts receivable -$4,500
Increase in Inventory -$3,000
Decrease in accounts payable -$7,500 -$3,000
Net Cash Provided by Operating activities $32,500
Cash flows from Investing activities
Purchase of land -$50,000
Sale of Equipment $14000
Purchase of short-term
investment -$8,300
Net Cash Used by Investing
Activities -$44,300
Cash flows from Financing activities
Common Stock Issued $40,000
Bond payable -$30,000
Dividend paid -$5,000
Notes payable $35,000
Net Cash Provided by Financing activities $40,000
Net increase (decrease) in cash $28,200
Cash Balance at December 31, 2020 $65,000
Cash Balance at December 31, 2021 $93,200
2. The Preparation of balance sheet is shown below:-
Kay wing, Inc.
Balance Sheet
For the Year Ended December 31,20X1
Asset
Cash $93,200
Accounts receivable $41,500
Inventory $73,000
Long-term investments $20,000
Land $89,000
Plant and equipment $158,000
Short-term investment $8,300
Total assets $483,000
Liabilities
Accounts payable $25,500
Taxes payable $4,000
Note payable $35,000
Bonds payable $125,000
Stockholders equity
Capital stock $130,000
Retained earnings $163,500
Total liabilities and stockholders
equity $483,000
Note:
Plant and equipment - Sale of equipment - Depreciation + Purchase of building
Plant and equipment = $109,000 - $14,000 - $12,000 + $75,000
= $158,000
Retained earnings = Opening Retained earning + net income - dividend
= $133,000 + $35,500 - $5,000
= $163,500
