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QUESTION 23 Statement of Cash Flows: Scroll down to complete all parts of this task. Presented below are the balance sheet accounts of Kern, Inc.

QUESTION 23

  1. Statement of Cash Flows: Scroll down to complete all parts of this task. Presented below are the balance sheet accounts of Kern, Inc. as of December 31, year 4 and year 3 and their net changes.
    Assets Year 4 Year 3 Net change
    Cash

    $ 471,000

    $ 307,000

    $ 164,000

    Marketable equity securities, at cost

    150,000

    250,000

    (100,000)

    Allowance to reduce marketable equity securities to market

    (10,000)

    (25,000)

    15,000

    Accounts receivable, net

    550,000

    515,000

    35,000

    Inventories

    810,000

    890,000

    (80,000)

    Investment in Word Corp., at equity

    420,000

    390,000

    30,000

    Property, plant, and equipment

    1,145,000

    1,070,000

    75,000

    Accumulated depreciation

    (345,000)

    (280,000)

    (65,000)

    Patent, net

    109,000

    118,000

    (9,000)

    Total assets

    $3,300,000

    $3,235,000

    $ 65,000

    Liabilities and Stockholders' Equity
    A/P and accrued liabilities

    $ 845,000

    $ 960,000

    $(115,000)

    Note payable, long term

    600,000

    900,000

    (300,000)

    Deferred tax liability

    190,000

    190,000

    --
    Common stock, $10 par value

    850,000

    650,000

    200,000

    Additional paid-in capital

    230,000

    170,000

    60,000

    Retained earnings

    585,000

    365,000

    220,000

    Total liabilities and
    stockholders' equity $3,300,000 $3,235,000 $ 65,000
    Additional Information:
    • On January 2, year 4, Kern sold equipment costing $45,000, with a carrying amount of $28,000, for $18,000 cash.
    • On March 31, year 4, Kern sold one of its marketable equity security holdings for $119,000 cash.
    • There were no other transactions involving marketable equity securities.
    • On April 15, year 4, Kern issued 20,000 shares of its common stock for cash at $13 per share.
    • On July 1, year 4, Kern purchased equipment for $120,000 cash.
    • Kern's net income for year 4 is $305,000. Kern paid a cash dividend of $85,000 on October 26, year 4.
    • Kern acquired a 20% interest in Word Corp.'s common stock during year 1. There was no goodwill attributable to the investment which is appropriately accounted for by the equity method. Word reported net income of $150,000 for the year ended December 31, year 4. No dividend was paid on Word's common stock during year 4.
    Prepare a statement of cash flows for Kern, Inc. for the year ended December 31, year 4 using the indirect method. Enter deductions/uses as a negative number. Round all amounts to the nearest whole number.
    Item Amount Amount
    Cash flows from operating activities:
    Net income [1____]
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation [2____]
    Amortization of patent [3____]
    Loss on sale of equipment [4____]
    Equity in income of Word Corp. [5____]
    Gain on sale of marketable equity securities [6____]
    Decrease in allowance to reduce marketable equity securities to market [7____]
    Increase in accounts receivable [8____]
    Decrease in inventories [9____]
    Decrease in accounts payable and accrued liabilities [10___]
    Net cash provided by operating activities [11___]
    Cash flows from investing activities:
    Sale of marketable equity securities [12___]
    Sale of equipment [13___]
    Purchase of equipment [14___]
    Net cash provided by investing activities [15___]
    Cash flows from financing activities:
    Issuance of common stock [16___]
    Cash dividend paid [17___]
    Payment on note payable [18___]
    Net cash used in financing activities [19___]
    Net increase in cash [20___]
    Cash at beginning of year 307,000
    Cash at end of year [21___]
    Note: Please enter your responses below. Find a way to make them correspond with the number within the table and separate them with semicolons. Use the following examples for [1____], [2____], and [3____] as a reference for formulating your responses: Example A: (1)555,000; (2)90,555; (3)1,234; Example B: 1--555,000; 2--90,555; 3--1,234; Example C: 1 = 555,000; 2 = 90,555; 3 = 1,234; Be sure that your answers are clear to your Instructor with whichever method you choose.
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