Version 6 ACCOUNTING 300A - Intermediate Accounting Chapter 05 - Statement of Cash Flows aroah Inc., a greeting card company, had the following statements. PHAROAH INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 Cash and cash equivalents Accounts receivable Inventory Prepaid rent Long-term available-for-sale investments Equipment Accumulated depreciation - equipment Copyrights Total assets 12/31/2020 $ 5,900 61,400 40,200 5,000 34,700 152,700 (35,400) 45,700 $ 310,200 12/31/2019 $ 6,900 31,100 #30300 INC 59,700 19500 DEC 4,100 900 INC 18,000 16700 INC 130,200 22500 INC (25,000) 10400 INC 49,900 4200 DEC $ 274,900 Accounts payable Income taxes payable Long-term notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and stockholders' equity $ 46,300 3,900 60,400 108,000 38,000 53,600 $ 310,200 $ 40,400 5900 INC 9,900 GOOD DEC 69,400 9000 DEC 100,000 8000 INC 20,000 18000 INC 35,200 18400 INC $ 274,900 PHAROAH INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 Sales revenue Cost of goods sold Gross profit Operating expenses Operating income Interest expense Gain on sale of equipment Income before income taxes Income tax expense Net income $335,075 175,200 159,875 120,100 39,775 $11,300 2,000 9,300 30,475 6,075 $24,400 Additional information: 1. Operating expenses include $4,200 of amortization expense. Version ACCOUNTING 300A - Intermediate Accounting Chapter 05 - Statement of Cash Flows 2. No unrealized gains or losses have occurred on the investments during the year. 3. Equipment that had a cost of $20,100 and was 70% depreciated was sold during the year. 4. No sales of available-for-sale investments occurred during the year. Instructions: Using the indirect method, prepare in a statement of cash flows for the year ended December 31, 2020 in accordance with GAAP. Use the table below which is in red font. NET INCOME $24,400 CASH FLOWE PROM OPERATING NET INCOME $24,400 INET CASH PROVIDED BY OPERATING DEPRECIATION EXPENSE $10,400 AMORTIZATION EXPENSE 4,200 GAIN ON SALE Of INVESTMENT -2000 INCREASE IN AR -30,300 DECREASE IN INVENTORY 19,500 INCREASE IN PREPAID RENT -900 INCREASE IN AUCTS PAMABLE 5900 DECREASE INCOME TAX PAYABLE -6000 NET CASH PROVIDED BY OPERATING 800 25,200 CASH FLOWS FROM INVESTING SALE OF EQUIPMENT 6030 INCREASE IN EQUIPMENT -22500 INCREASE IN LONG-TERM APS -16700 NET CASH USED BY INVESTING -33170 ICASH FLONS FROM FINANCING DECREPSE LONG-TERM N/P 9000 ISSUANCE OP COMMON STOCK 8000 ADDITIONAL PAID-IN CAPITAL 18000 NET CASH PROVIDED BY FINANCING 17000 NET INCREASE IN CASH CASH AT BEGINNING OF YEAR ICASH AT END OF YEPR 9030 6900 15930
