Statement of Cash Flows (Direct Method)

The Sky Companys income statement and comparative balance sheets as of December 31 of 2019 and 2018 follow:

SKY COMPANY Income Statement For the Year Ended December 31, 2019
Sales Revenue		$800,000
Dividend Income		19,000
		819,000
Cost of Goods Sold	$440,000
Wages and Other Operating Expenses	130,000
Depreciation Expense	39,000
Patent Amortization Expense	7,000
Interest Expense	13,000
Income Tax Expense	30,000
Loss on Sale of Equipment	5,000
Gain on Sale of Investments	(10,000)	654,000
Net Income		$165,000

SKY COMPANY Balance Sheets
	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash and Cash Equivalents	$63,000	$29,000
Accounts Receivable	45,000	35,000
Inventory	100,000	77,000
Prepaid Expenses	10,000	6,000
Long-term InvestmentsAvailable for Sale	-	50,000
Fair Value Adjustment to Investments	-	7,000
Land	190,000	100,000
Buildings	445,000	350,000
Accumulated Depreciation - Buildings	(91,000)	(75,000)
Equipment	179,000	225,000
Accumulated DepreciationEquipment	(42,000)	(46,000)
Patents	50,000	32,000
Total Assets	$949,000	$790,000
Liabilities and Stockholders Equity
Accounts Payable	$21,000	$18,000
Interest Payable	6,000	5,000
Income Tax Payable	8,000	12,000
Bonds Payable	135,000	130,000
Preferred Stock ($100 par value)	100,000	75,000
Common Stock ($5 par value)	379,000	364,000
Paid-in-capital in Excess of Par ValueCommon	133,000	124,000
Retained Earnings	167,000	55,000
Unrealized Gain on Investments	-	7,000
Total Liabilities and Stockholders Equity	$949,000	$790,000

During the year, the following transactions occurred: 1. Sold longterm investments costing $50,000 for $60,000 cash. Unrealized gains totaling $7,000 related to these investments had been recorded in earlier years. At yearend, the fair value adjustment and unrealized gain account balances were eliminated. 2. Purchased land for cash. 3. Capitalized an expenditure made to improve the building. 4. Sold equipment for $14,000 cash that originally cost $46,000 and had $27,000 accumulated depreciation. 5. Issued bonds payable at face value for cash. 6. Acquired a patent with a fair value of $25,000 by issuing 250 shares of preferred stock at par value. 7. Declared and paid a $53,000 cash dividend. 8. Issued 3,000 shares of common stock for cash at $8 per share. 9. Recorded depreciation of $16,000 on buildings and $23,000 on equipment.

Required

a. Calculate the change in cash that occurred in 2019. b. Prepare a statement of cash flows using the direct method. Use one cash outflow for cash paid for wages and other operating expenses. Accounts payable relate to inventory purchases only.

a. Change in Cash during 2019 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

SKY COMPANY Statement of Cash Flows For Year Ended December 31, 2019
Cash Flow from Operating Activities
Cash Received from Customers	Answer
Cash Received as Dividends	Answer
		Answer
Cash Paid for Merchandise Purchased	Answer
Cash Paid for Wages and Other Operating Expenses	Answer
Cash Paid for Interest	Answer
Cash Paid for Income Taxes	Answer	Answer
Cash Provided by Operating Activities		Answer
Cash Flow from Investing Activities
Sale of Investments	Answer
Purchase of Land	Answer
Improvements to Building	Answer
Sale of Equipment	Answer
Cash Used by Investing Activities		Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable	Answer
Issuance of Common Stock	Answer
Payment of Dividends	Answer
Cash Used by Financing Activities		Answer
Net Change in cash		Answer
Cash at Beginning of Year		Answer
Cash at End of Year		Answer