The income statement, balance sheets, and additional information for Great Adven
ID: 2534266 • Letter: T
Question
The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.
Additional Information for 2020:
1. Borrowed $560,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,716.
2. Issued common stock for $1,200,000.
3. Purchased 10,000 shares of treasury stock for $12 per share.
4. Reissued 5,000 shares of treasury stock at $13 per share.
5. Declared and paid a cash dividend of $115,000.
Required:
Prepare the statement of cash flows for the year ended December 31, 2020, using the indirectmethod. (List cash outflows as negative amounts.)
GREAT ADVENTURES, INC.Income Statement
For the Year Ended December 31, 2020 Revenues: Service revenue (clinic, racing, TEAM) $ 555,000 Sales revenue (MU watches) 130,000 Total revenues $ 685,000 Expenses: Cost of goods sold (watches) 76,000 Operating expenses 304,876 Depreciation expense 56,000 Interest expense 30,324 Income tax expense 60,600 Total expenses 527,800 Net income $ 157,200
Explanation / Answer
GREAT ADVENTURES INC Partial Statement of Cash Flows For the 3 months Ended December 31, 2020 Cash flows from operating activities Net Income $ 157,200 Adjustments to reconcile net income to : Depreciation expenses $ 56,000 Increase in accounts receivable $ (13,000) Increase in inventory $ (3,300) Increase in other current assets $ (2,300) Increase in accounts payable $ 3,300 Increase in income tax payable $ 19,600 Net cash flow from operating activities $ 217,500 Cash flows from investing activities Cash paid for purchase of Land $ (600,000) Cash paid for purchase of Equipment $ (1,000,000) Net cash used by investing activities $ (1,600,000) Cash flows from financing activities Cash received from borrowings $ 560,000 Cash paid for repayment of borrowings $ (37,716) Cash received from issuance of common stock $ 1,200,000 Cash paid for purchase of treasury stock $ (120,000) Cash received from reissue of treasury stock $ 65,000 Cash paid for dividends $ (115,000) Net cash provided by financing activities $ 1,552,284 Net Decrease in cash and cash equivalents $ 169,784 Cash and cash equivalents at beginning of period $ 144,000 Cash and cash equivalents at end of period $ 313,784
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