The income statement, balance sheets, and additional information for Great Adven
ID: 2533022 • Letter: T
Question
The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.
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. (List cash outflows as negative amounts.)
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
GREAT ADVENTURES INC Statement of Cashflows For the year Ended December 31, 2020 Cash flows from operating activities Net Income $ 144,000 Adjustments to reconcile net income to : Depreciation expenses $ 45,000 Increase in accounts receivable $ (7,500) Increase in inventory $ (2,750) Increase in other current assets $ (1,750) Increase in accounts payable $ 2,750 Increase in income taxes payable $ 18,500 Net cash flow from operating activities $ 198,250 Cash flows from investing activities Purchase of land $ (450,000) Purchase of building $ (1,000,000) Net cash provided by investing activities $ (1,450,000) Cash flows from financing activities Issued common stock $ 1,200,000 Reissued treasury stock $ 102,000 6000*17 Issued note payable $ 450,000 Repayment of note payable $ (37,584) Purchased treasury stock $ (192,000) -12000*16 Payment of dividends $ (114,000) Net cash used by financing activities $ 1,408,416 Net Decrease in cash and cash equivalents $ 156,666 Cash and cash equivalents at beginning of period $ 133,000 Cash and cash equivalents at end of period $ 289,666
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