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Waterways Continuing Problem 17 (Indirect Method) Waterways prepared the balance sheet and income statement for the irrigation installation division for 2020. Now the company also
Waterways Continuing Problem 17 (Indirect Method) Waterways prepared the balance sheet and income statement for the irrigation installation division for 2020. Now the company also needs to prepare a statement of cash flows for the same division. The comparative balance sheets for Waterways Corporation's Irrigation Installation Division for the years 2019 and 2020 and the income statement for the year 2020 are presented below. Additional information: 1. Waterways sold a company vehicle for $23,900. The vehicle had been used for 10 years. It cost $80,700 when purchased and had a 10-year life and a $5,900 salvage value. Straight-line depreciation was used. 2. Waterways purchased with cash new equipment costing $208,400. 3. Prepaid expenses increased by $33,100. All changes in accounts payable relate to inventory purchases. WATERWAYS CORPORATION INSTALLATION DIVISION Balance Sheets December 31 Assets 2020 2019 Current assets Cash $839,700 $740,200 Accounts receivable 682,300 547,600 Work in process 695,900 Inventory 16,800 7,500 Prepaid expenses 76,100 43,000 Total current assets 2,310,800 1,338,300 Property, plant, and equipment Land 301,000 301,000 Buildings 454,000 454,000 Equipment 929,400 801,700 Furnishings 40,800 40,800 Accumulated depreciation (482,200) (486,700) Total property, plant, and equipment 1,243,000 1,110,800 Total assets $3,553,800 $2,449,100 Liabilities and Stockholders' Equity $127,900 80,600 2,000 Current liabilities Accounts payable Income taxes payable Wages payable Interest payable Other current liabilities Revolving bank loan payable Total current liabilities $155,700 100,900 4,500 1,200 14,400 14,900 291,600 15,300 225,800 Long-term liabilities 141,000 432,600 225,800 Note payable Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 1,250,000 1,871,200 3,121,200 $3,553,800 1,250,000 973,300 2,223,300 $2,449,100 WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement For the Year Ending December 31, 2020 Sales $5,547,114 Less: Cost of goods sold 3,146,600 Gross profit 2,400,514 Operating expenses Advertising $49,700 Insurance 402,400 Salaries and wages 579,900 Depreciation 70,300 Other operating expenses 21,300 Total operating expenses 1,123,600 Income from operations 1,276,914 Other income Gain on sale of equipment 18,000 Other expenses Interest expense (12,200) Net other income and expenses 5,800 Income before income tax 1,282,714 Income tax expense 384,814 Net income $897,900 (a) Prepare a statement of cash flows using the indirect method for the year 2020. (Shov parenthesis e.g. (15,000).) WATERWAYS CORPORATION-Installation Division Statement of Cash Flows-Indirect Method ( For the Year Ended December 31, 2020 A Cash flows from operating activities Net income 897,900 $ Adjustments to reconcile net income to Net decrease in cash Depreciation expense Gain on sale of equipment Increase in accounts receivable Increase in work in process Increase in inventory Increase in prepaid expenses Increase in accounts payable Increase in income taxes payable Increase in wages payable Increase in interest payable Decrease in other current liabilities A Net cash provided by operating activities Cash flows from investing activities Purchase of equipment Sale of equipment Net cash used by financing activities (c) Determine free cash flow for the year 2020. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Free cash flow
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