Question

Oriole Company’s comparative balance sheets are presented below: Oriole Company Comparative Balance Sheets December 31 2020 2019 Cash $ 16,500 $ 17,600 Accounts receivable 25,000 22,200 Investments 19,950 15,850 Equipment 60,150 70,050 Accumulated depreciation—equipment (14,250 ) (10,400 ) Total $107,350 $115,300 Accounts payable $ 14,850 $ 11,050 Bonds payable 10,100 30,100 Common stock 50,100 44,700 Retained earnings 32,300 29,450 Total $107,350 $115,300 Additional information: 1. Net income was $18,250. Dividends declared and paid were $15,400. 2. Equipment which cost $9,900 and had accumulated depreciation of $2,000 was sold for $3,400. 3. No noncash investing and financing activities occurred during 2020. Prepare a statement of cash flows for 2020 using the indirect method.

Answer 1

Answer:

Explanation:

Oriole Company

Statement of cash flow

For the year ending 2020

Cash flows from Operating Activities

Net Income                                                                                       $18,250

Adjustments to reconcile net income to

net cash provided by operating activities:

Add: Loss on sale of equipment

($9,900 - $2,000 - $3,400)                                                               $4,500

Depreciation on Fixed Assets ($14,250 - $10,400 - $2,000)          $1,850                

(Increase) Decrease in current assets:

Accounts receivable ($25,000 - $22,200)                                     ($2,800)

Increase (Decrease) in current liabilities:

Accounts Payable ($14,850 - $11,050)                                             $3,800

Net Cash provided by operating activities                                   $25,600

Cash flows from Investing Activities

Disposal of Equipment                                                                    $3,400

Net Cash used in Investing Activities                                          $3,400

Cash flows from Financing Activities

Payments on Bonds Payable ($10,100 - $30,100)                       ($20,000)

Common Stock ($50,100 - $44,700)                                               $5,400

Dividends paid                                                                                ($15,400)

Net Cash used in financing activities                                        ($30,000)                                    

Beginning Cash Balance                                                                 $17,600

Ending Cash Balance                                                                      $16,500