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Statement of Cash Flows - Problems
Statement of Cash Flows - Problems
The income statement for the year ended December 31, 2020, follows:
UTAH JAZZ
Income Statement
For the Year Ended December 31, 2020
Sales $1,120,000
Cost of goods sold:
Beginning inventory, January 1, 2020 $ 450,000
Purchases ........................... 660,000
Cost of goods available ............. $1,110,000
Less ending inventory, December 31, 360,000 750,000
2020 ...............................
Gross profit on sales ................. $ 370,000
Operating expenses .................... 360,000
Operating income ...................... $ 10,000
Other revenues and expenses:
Loss on sale of long-term investment (15,000)
Net loss .............................. $ (5,000)
After paying cash dividends, the decrease in retained earnings totaled $95,000.
Management is alarmed by the shrinkage in the company's cash position during 2020.
Prepare a statement of cash flows for 2020 using the direct method.
The following are presented by Twice Corporation
December 31
2020 2019
Cash and cash equivalents ............ P 250,000 P 220,000
Accounts receivable .................. 327,600 356,000
Inventories .......................... 822,000 780,000
Available-for-sale securities ........ 0 200,000
Equipment ............................ 2,400,000 2,040,000
Accumulated depreciation ............. (700,000) (760,000)
P3,099,600 P2,836,000
Additional information:
(a) Net income for 2020, P545,600.
(b) Depreciation reported on income statement, P140,000.
(c) Fully depreciated equipment, no salvage value, was scrapped.
Equipment was purchased for P560,000.
(d) Bonds of P400,000 were retired at their face value.
(e) 10,000 shares of common stock were issued for cash at P28 per share.
(f) Cash dividends declared and paid, P240,000.
(g) Available-for-sale securities with a book value of P200,000 were sold
for P300,000.
Prepare a statement of cash flows for Twice Corporation for 2020, using the indirect
method.