Question

Condensed financial data of Swifty Company for 2020 and 2019 are presented below.

SWIFTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 2020 Cash $1,780 Receivables 1,760 Inventory 1,620 Plant assets 1,910 Accumulated depreciation (1,210 ) Long-term investments (held-to-maturity) 1,330 $7,190 2019 $1,170 1,280 1,880 1,670 (1,160) 1,440 $6,280 Accounts payable Accrued liabilities Bonds payable Common stock Retained earnings $1,230 210 1,370 1,920 2,460 $7,190 $920 250 1,560 1,680 1,870 $6,280 SWIFTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Income from operations Other revenues and gains Gain on sale of investments Income before tax Income tax expense Net income Cash dividends Income retained in business $6,820 4,600 2,220 910 1,310 80 1,390 540 850 260 $590

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.

Prepare a statement of cash flows using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

SWIFTY COMPANY
Statement of Cash flows
For the Year Ended December 31, 2020
(Direct method)
Cash flows from operating activities
Cash received from customers		$    6,340	6820+1280-1760
Cash paid to suppliers	$ (4,030)		4600+920-1230+1620-1880
Cash paid for selling and administrative expenses	$      (900)		910+250-210-(1210-1160)
Cash paid for income tax expenses	$      (540)
		$ (5,470)
Net cash cash flow from operating activities		$        870
Cash flows from investing activities
Cash paid for purchase of plant assets	$      (170)		1670-1910+70
Cash received from sale of long term investment	$        190		1440-1330+80
Net cash flow from investing activities		$          20
Cash flows from financing activities
Cash paid for dividends	$      (260)
Cash paid to retire bonds payable	$      (190)
Cash received from issuance of common stock	$        170		1920-1680-70
Net cash flow used by financing activities		$      (280)
Change in cash		$        610
Cash and cash equivalents at beginning of period		$    1,170
Cash and cash equivalents at end of period		$    1,780
Non cash investing and financing activities
Acquisition of plant assets by issuing common stock		$          70

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