PROBLEM 2 (35 Points) The accounting staff of Dee's Landscaping Inc. has given the following information for December 31 of the current year. Cash sales $ 230,00 Credit sales 3,450,000 Collections on accounts receivable 2,810,000 Cash transferred from the money market fund to the general bank account $200,000 Interest and dividends received 40,000 Purchases (all on account) 1.822.000 |Payments on accounts payable to merchandise suppliers 1,220,000 Cash payments for operating expenses 930,000 Interest paid 130,000 Income taxes paid 65,000 Loans made to borrowers 690,000 Collections on loans (excluding receipts of interest) 300,000 Cash paid to acquire plant assets 1,700,000 Book value of plant assets sold $20,000 Loss on sales of plant assets 30,000 Proceeds from issuing bonds payable 2.000.000 Dividends paid 250,000 Cash and cash equivalents, Jan. 1 278,000 Instructions a. Prepare a statement of cash flows. Place brackets around amounts representing cash outflows. Use the direct method of reporting cash flows from operating activities. b. Some of the items will be listed in your statement without change. However, you will have to combine certain given information to compute the amounts of (1) collections from customers, (2) cash paid to suppliers and employees, and (3) proceeds from sales of plant assets. (Hint: Not every item listed is used in preparing a statement of cash flows.)