Additional Information for 2020: 1. Borrowed $450,000 in January 2020. Made 12 m

Question

Additional Information for 2020:

1. Borrowed $450,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,584.

2. Issued common stock for $1,200,000.

3. Purchased 12,000 shares of treasury stock for $16 per share.

4. Reissued 6,000 shares of treasury stock at $17 per share.

5. Declared and paid a cash dividend of $114,000.

Required:

Prepare the statement of cash flows for the year ended December 31, 2020, using the indirect method

GREAT ADVENTURES, INC.
Income Statement
For the Year Ended December 31, 2020   Revenues:      Service revenue (clinic, racing, TEAM) $ 533,000              Sales revenue (MU watches) 108,000                Total revenues $ 641,000         Expenses:          Cost of goods sold (watches) 65,000                  Operating expenses 303,776                  Depreciation expense 45,000                  Interest expense 29,224                  Income tax expense 54,000                     Total expenses 497,000         Net income $ 144,000      

Explanation / Answer

Statement of Cash Flow Particulars Amount Total Amount Income               144,000.00 Depreciation                  45,000.00 Increase in AR                  (7,500.00) Increase in inventory                  (2,750.00) Increase in Other current assets                  (1,750.00) Increase in AP                    2,750.00 Increase in income tax payable                  18,500.00 Cash flow from operating activities               198,250.00 Cash flow from Investing activities Purchase of Land             (450,000.00) Purchase of Building         (1,000,000.00) Sale of PPE Cash flow from Investing activities         (1,450,000.00) Cash flow from Financing activities Issue of Stock               100,000.00 Issue of paid in capital            1,106,000.00 Issue of notes payable               450,000.00 Repayment of notes               (37,584.00) Purchase of treasury stock = 12000*16               (96,000.00) Dividends Paid             (114,000.00) Cash flow from Financing activities            1,408,416.00 net change in cash and cash equivalents               156,666.00 Opening cash and cash equivalents               133,000.00 Closing cash and cash equivalents               289,666.00

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