Monon Cable Television Company reported the following financial statements for 2019:

Monon Cable Television Company

Balance Sheets

December 31, 2019 and 2018

Additional Information:
1. Equipment (an old antenna) with a cost of $35,000 and accumulated depreciation of $34,000 was taken down and sold as scrap for $1,800 cash during 2019. A new antenna was purchased for cash at an installed cost of $60,000.
2. A building was purchased for $20,000 cash.
3. Trucks were purchased for $6,000 cash.
4. Depreciation expense for 2019 was $28,000.
5. A long-term note payable was issued for $40,000 cash.
6. Dividends of $14,200 were paid during 2019.

Required:

1. Prepare a statement of cash flows using the indirect method to compute net cash flow from operating activities.

2. Explain what has been responsible for the decrease in cash?

Transcribed Image Text:

2019 2018 ASSETS Current assets: $ 2,000 11,300 1,200 $ 14,500 $ 8,000 6,000 1,700 $ 15,700 Cash Accounts receivable Supplies Total current assets Property, plant, and equipment: Equipment (antenna) Buildings $ 60,000 210,000 81,000 $ 351,000 (125,000) $ 35,000 190,000 75,000 $ 300,000 (131,000) Trucks Accumulated depreciation Net property, plant, and equipment Total assets 226,000 169,000 $240,500 $184,700 LIABILITIES AND EQUITY Current liabilities: $ 6,500 4,900 3,300 $ 8,000 13,600 3,100 Accounts payable Rent payable Royalties payable Total current liabilities $ 14,700 $ 24,700 Long-term liabilities: Notes payable (long-tem) Total liabilities 40,000 $ 54,700 $ 24,700 Equity: Common stock $100,000 $100,000 60,000 Retained eamings Total equity Total liabilities and equity 85,800 185,800 $240,500 160,000 $184,700 Sales $519,000 Less operating expenses: Royalties expense Salaries expense Utilities expense Supplies expense Rent expense Depreciation expense Income from $240,000 26,000 83,000 13,000 79,000 28,000 469,000 $ 50,000 operations Other income (expenses): Gain on disposal of property, plant, and equipment Interest expense Income before taxes 800 (1,800) (1,000) $ 49,000 Less: Income taxes (9,000) expense Net income $ 40,000 %24