Question
Preparing a Statement of Cash FlowsIndirect Method Sterling Corporations recent comparative balance sheet and income statement follow. Balance Sheets, December 31 2019 2020 Difference Assets
Preparing a Statement of Cash FlowsIndirect Method
Sterling Corporations recent comparative balance sheet and income statement follow.
Balance Sheets, December 31 | 2019 | 2020 | Difference |
---|---|---|---|
Assets | |||
Cash and cash equivalents | $ 74,800 | $ 73,700 | $ (1,100) |
Accounts receivable (net) | 26,400 | 37,400 | 11,000 |
Inventory | 35,200 | 30,800 | (4,400) |
Investment, long-term | 13,200 | 0 | (13,200) |
Fixed assets | 176,000 | 215,600 | 39,600 |
Accumulated depreciation | (105,600) | (85,800) | 19,800 |
Total assets | $220,000 | $271,700 | $51,700 |
Liabilities and Stockholders Equity | |||
Accounts payable | $41,800 | $26,400 | $(15,400) |
Bonds payable | 22,000 | 66,000 | 44,000 |
Common stock, no-par | 110,000 | 143,000 | 33,000 |
Retained earnings | 46,200 | 61,600 | 15,400 |
Treasury stock | 0 | (25,300) | (25,300) |
Total liabilities and stockholders equity | $220,000 | $271,700 | $51,700 |
Income Statement, For Year Ended December 31 | 2020 |
---|---|
Sales revenue | $154,000 |
Cost of goods sold | (92,400) |
Gross margin | 61,600 |
Depreciation expense | (11,000) |
Other operating expenses | (39,600) |
Gain on sale of investments | 6,600 |
Loss on sale of fixed assets | (2,200) |
Net income | $15,400 |
Analysis of selected accounts and transactions
1. Sold fixed assets for cash; cost, $46,200, and two-thirds depreciated.
2. Purchased fixed assets for cash, $19,800.
3. Purchased fixed assets; exchanged unissued bonds of $66,000 (face value and fair value) in payment.
4. Sold the long-term investments for cash. Assume carrying value of the investment is equal to its original purchase price.
5. Purchased treasury stock for cash, $25,300.
6. Retired bonds payable at maturity date by issuing common stock, $22,000.
7. Sold unissued common stock for cash, $11,000.
Required
Prepare the statement of cash flows for Sterling Corporation for the year ended December 31, 2020, assuming the indirect method in presenting cash flows from operating activities.
Statement of Cash Flows For the Year Ended December 31, 2020 | |
---|---|
Cash flows from operating activities | |
Net income | Answer |
Adjustments: | |
Depreciation expense | Answer |
Gain on sale of long-term investments | Answer |
AnswerCost of goods soldDecrease in accumulated depreciationDecrease in retained earningsGain on sale of fixed assetsIncrease in bonds payableLoss on sale of fixed assetsLoss on sale of long-term investmentsPurchase of fixed assetsPurchase of fixed assets by issuing bondsPurchase of treasury stock | Answer |
Increase in accounts receivable, net | Answer |
Decrease in inventory | Answer |
Decrease in accounts payable | Answer |
Net cash provided (used) by operating activities | Answer |
Cash flows from investing activities | |
Sale of fixed assets | Answer |
AnswerCost of goods soldDecrease in accumulated depreciationDecrease in retained earningsGain on sale of fixed assetsIncrease in bonds payableLoss on sale of fixed assetsLoss on sale of long-term investmentsPurchase of fixed assetsPurchase of fixed assets by issuing bondsPurchase of treasury stock | Answer |
Sale of long-term investment | Answer |
Net cash provided (used) by investing activities | Answer |
Cash flows from financing activities | |
Issue common stock | Answer |
AnswerCost of goods soldDecrease in accumulated depreciationDecrease in retained earningsGain on sale of fixed assetsIncrease in bonds payableLoss on sale of fixed assetsLoss on sale of long-term investmentsPurchase of fixed assetsPurchase of fixed assets by issuing bondsPurchase of treasury stock | Answer |
Net cash provided (used) by financing activities | Answer |
Net increase in cash and cash equivalents during 2020 | Answer |
Cash and cash equivalents, January 1, 2020 | Answer |
Cash and cash equivalents, December 31, 2020 | Answer |
Noncash Disclosure | |
AnswerCost of goods soldDecrease in accumulated depreciationDecrease in retained earningsGain on sale of fixed assetsIncrease in bonds payableLoss on sale of fixed assetsLoss on sale of long-term investmentsPurchase of fixed assetsPurchase of fixed assets by issuing bondsPurchase of treasury stock | Answer |
Retired bonds payable with common stock | Answer |
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