Question

Presented below are the 2021 income statement and comparative balance sheet me statement and comparative balance sheets for Santana Industries. P4-11 Statement of cash flows; indirect method • L04-8 $ 17,650 SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2021 ($ in thousands) Sales revenue $14,250 Service revenue 3,400 Total revenue Operating expenses: Cost of goods sold 7,200 Selling expense 2,400 General and administrative expense 1,500 Total operating expenses Operating income Interest expense Income before income taxes Income tax expense Net income 11,100 6,550 150 6,400 1,600 $ 4,800 Dec. 31, 2021 Dec. 31, 2020 $ 8,300 2,500 4,000 150 14,500 (5,100) $24,350 $ 2,200 2,200 3,000 300 12,000 (4,500) $15,200 Balance Sheet Information ($ in thousands) Assets: Cash Accounts receivable Inventory Prepaid rent Equipment Less: Accumulated depreciation Total assets Liabilities and shareholders' equity: Accounts payable Interest payable Deferred revenue Income taxes payable Notes payable (due 12/31/2023) Common stock Retained earnings Total liabilities and shareholders' equity $ 1,100 600 800 $ 1,400 100 800 550 5,000 10,000 6,500 $ 24,350 10,000 2,700 $15,200

Answer 1

nm TBC SANTANA INDUSTRIES Statement of Cash Flows For the Year Ended December 31, 2021 ($ in thousands) 5 Cash flows from operating activities 6 Net Income $ 4.800 7 Adjustments for noncash effects: 8 Depreciation Expense $ 1,600 9 Changes in operating assets and liabilties: 10 Increase in Accounts Receivable $ (300) Increase in Inventory $ (1,000) Decrease in Prepaid Rent $ 150 13 Increase in Accounts Payable $ 300 14 Increase in Interest Payable $ 100 Increase in Deferred Revenue $ 200 Decrease in Income taxes payable $ (250) 17 Net Cash flows from operating activities $ 5,600 18 Cash flows from investing activities: 19 Purchase of Equipment $ (4,000) 20 Sale of Equipment $ 500 21 Net cash flows from investing activities $ (3,500) 22 Cash flows from financing activities: Issue of Notes $ 5,000 24 Dividends Paid $ (1,000) Net cash flows from financing activities $ 4,000 26 Net increase in cash $ 6.100 27 Cash, January 1 $ 2,200 28 Cash, December 31 $ 8,300 29 16 23 25

Α -Nm 7 on 12 13 Bc SANTANA INDUSTRIES Statement of Cash Flows For the Year Ended December 31, 2021 ($ in thousands) 5 Cash flows from operating activities 6 Net Income 4800 7 Adjustments for noncash effects: 8 Depreciation Expense 1600 9 Changes in operating assets and liabilties: 10 Increase in Accounts Receivable =2200-2500 Increase in Inventory =3000-4000 Decrease in Prepaid Rent =300-150 Increase in Accounts Payable =1400-1100 14 Increase in Interest Payable =100-0 15 Increase in Deferred Revenue =800-600 16 Decrease in Income taxes payable =550-800 Net Cash flows from operating activities =SUM(B6:B16) 18 Cash flows from investing activities: Purchase of Equipment -4000 20 Sale of Equipment 500 Net cash flows from investing activities =SUM(B19:B20 22 Cash flows from financing activities: 23 Issue of Notes 5000 24 Dividends Paid -1000 25 Net cash flows from financing activities =SUM(B23:B24) 26 Net increase in cash =SUM(C17:C25) 27 Cash, January 1 2200 28 Cash, December 31 =C26+C27 17 21 29

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