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The 2020 comparative balance sheet and income statement of King Hardware Corp. follow. King had no non-cash investing and financing transactions during 2020. During
The 2020 comparative balance sheet and income statement of King Hardware Corp. follow. King had no non-cash investing and financing transactions during 2020. During the year, there were no sales of land or equipment, no issuance of notes payable, and no repurchase of shares transactions. (Click the icon to view the comparative balance sheet.) Requirements (Click the icon to view the income statement.) 1. Prepare the 2020 statement of cash flows, formatting operating activities by using the indirect method. 2. How will what you learned in this problem help you evaluate an investment? Requirement 1. Prepare the 2020 statement of cash flows, formatting operating activities by using the indirect method. Start by completing the cash flows from operating activities. Then, continue with completing the investing and financing activities sections. Finally, determine the net increase in cash. (Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in a statement of cash flows.) King Hardware Corp. Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Decrease in accounts receivable Decrease in inventories Increase in prepaid expenses Increase in accounts payable Decrease in salary payable Decrease in other accrued liabilities Net cash provided by operating activities Cash flows from investing activities: Purchase of land Purchase of equipment Net cash used for investing activities Cash flows from financing activities: Payment of dividends Payment of note payable Issuance of common shares Net cash used for financing activities Net increase in cash Cash balance, December 31, 2019 Cash balance, December 31, 2020 Requirement 2. How will what you learned in this problem help you evaluate an investment? A. Learn how companies prepare the statement of cash flows B. Learn how operating activities, investing activities, and financing activities generate cash receipts and cash payments OC. Both A and B D. None of the above
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