Question

The following are the financial statements of Nosker Company.

NOSKER COMPANY Comparative Balance Sheets December 31
Assets		2020			2019
Cash		$34,000			$19,100
Accounts receivable		32,900			18,750
Inventory		26,350			20,400
Equipment		59,050			77,600
Accumulated depreciation—equipment		(30,000	)		(23,150	)
Total		$122,300			$112,700
Liabilities and Stockholders’ Equity
Accounts payable		$28,050			$ 16,400
Income taxes payable		7,050			8,100
Bonds payable		27,200			32,900
Common stock		18,900			13,150
Retained earnings		41,100			42,150
Total		$122,300			$112,700

NOSKER COMPANY Income Statement For the Year Ended December 31, 2020
Sales revenue		$241,150
Cost of goods sold		176,000
Gross profit		65,150
Operating expenses		24,300
Income from operations		40,850
Interest expense		3,600
Income before income taxes		37,250
Income tax expense		8,300
Net income		$28,950

Additional data:

1.		Dividends declared and paid were $30,000.
2.		During the year, equipment was sold for $8,300 cash. This equipment cost $18,550 originally and had a book value of $8,300 at the time of sale.
3.		All depreciation expense, $17,100, is in the operating expenses.
4.		All sales and purchases are on account.

a) Prepare a statement of cash flows using the indirect method:

Answer 1

Cash flow from operating activities
Net income		28950
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense	17100
Increase account receivable	-14150
Increase inventory	-5950
Increase account payable	11650
Decrease income tax payable	-1050
		7600
Net cash flow from operating activities		36550
Cash flow from investing activities
Sale of equipment	8300
Net cash flow from investing activities		8300
Cash flow from financing activities
Bonds repaid	-5700
Dividend paid	-30000
Issue common Stock	5750
Net cash flow from financing activities		-29950
Net cash flow		14900
Beginning Cash		19100
Ending cash		34000