Statement of Cash Flows (Indirect Method)

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

GEARY COMPANY Income Statement For the Year Ended December 31, 2019
Service Fees Earned		$320,000
Dividend and Interest Income		16,000
		$336,000
Wages and Other Operating Expenses	$288,000
Depreciation Expense	55,000
Franchise Amortization Expense	10,000
Loss on Sale of Equipment	7,000
Gain on Sale of Investments	(17,000)	343,000
Net Loss		$(7,000)

GEARY COMPANY Balance Sheets
	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash	$21,000	$33,000
Accounts Receivable	14,000	18,000
Interest Receivable	-	4,000
Prepaid Expenses	16,000	10,000
Long-term InvestmentsAvailable for Sale	-	70,000
Fair Value Adjustment to Investments	-	10,000
Plant Assets	656,000	655,000
Accumulated Depreciation	(237,000)	(185,000)
Franchise	91,000	29,000
Total Assets	$561,000	$644,000
Liabilities and Stockholders Equity
Accrued Liabilities	$12,000	$14,000
Notes Payable	-	26,000
Common Stock ($10 par value)	535,000	535,000
Retained Earnings	34,000	59,000
Unrealized Gain on Investments	-	10,000
Treasury Stock	(20,000)	-
Total Liabilities and Stockholders Equity	$561,000	$644,000

During the year, the following transactions occurred: 1. Sold equipment for $9,000 cash that originally cost $19,000 and had $3,000 accumulated depreciation. 2. Sold longterm investments that had cost $70,000 for $87,000 cash. Unrealized gains totaling $10,000 related to these investments had been recorded in earlier years. At yearend, the fair value adjustment and unrealized gain account balances were eliminated. 3. Paid cash to extend the companys exclusive franchise for another three years. 4. Paid off a note payable at the bank on January 1. 5. Declared and paid an $18,000 dividend. 6. Purchased treasury stock for cash. 7. Purchased land valued at $20,000.

Required a. Compute the change in cash that occurred in 2019. b. Prepare a statement of cash flows using the indirect method.

a. Change in Cash during 2019 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

GEARY COMPANY Statement of Cash Flows For Year Ended December 31, 2019
Cash Flow from Operating Activities
Net Loss		Answer
Add (deduct) items to convert net income to cash basis
Depreciation		Answer
Franchise Amortization		Answer
Loss on Sale of Equipment		Answer
Gain on Sale of Investments		Answer
Accounts Receivable	AnswerIncreaseDecrease	Answer
Interest Receivable	AnswerIncreaseDecrease	Answer
Prepaid Expenses	AnswerIncreaseDecrease	Answer
Accrued Liabilities	AnswerIncreaseDecrease	Answer
Cash Provided by Operating Activities		Answer
Cash Flow from Investing Activities
Sale of Equipment		Answer
Purchase of Land		Answer
Sale of Investments		Answer
Extension of Franchise		Answer
Cash Provided by Investing Activities		Answer
Cash Flow from Financing Activities
Payment of Notes Payable		Answer
Payment of Dividends		Answer
Purchase of Treasury Stock		Answer
Cash Used by Financing Activities		Answer
Net Change in Cash		Answer
Cash at Beginning of Year		Answer
Cash at End of Year		Answer