Burns Corporation\'s net income last year was $94,600. Changes in the company\'s

Question

Burns Corporation's net income last year was $94,600. Changes in the company's balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Cash and cash equivalents $ 24,200 Accounts receivable $ 13,700 Inventory $ (17,300 ) Prepaid expenses $ 4,300 Long-term investments $ 10,600 Property, plant, and equipment $ 71,400 Accumulated depreciation $ 32,600 Liability and Equity Accounts: Accounts payable $ (19,600 ) Accrued liabilities $ 17,400 Income taxes payable $ 4,400 Bonds payable $ (62,400 ) Common stock $ 44,000 Retained earnings $ 90,500 The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,100. Required: a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.) b. Prepare the investing activities section of the company's statement of cash flows for the year. c. Prepare the financing activities section of the company's statement of cash flows for the year.

Explanation / Answer

Answer a The operating activities section of the company's statement of cash flows for the year(indirect method) Net Income $94,600 Depreciation $32,600 Increase in Accounts Receivables -$13,700 Decrease in Inventory $17,300 Increase in Prepaid Expenses -$4,300 Decrease in Accounts Payable -$19,600 Increase in Accrued Liabilities $17,400 Increase in Income Tax Payable $4,400 Net Cash Available from Operating Activities $128,700 Answer b The investing activities section of the company's statement of cash flows for the year Purchase of Long term Investments -$10,600 Purchase of Property,Plant and Equipment -$71,400 Net Cash Used for Investing Activities -$82,000 Answer c The financing activities section of the company's statement of cash flows for the year Repayment of Bonds Payable -$62,400 Issue of Common stock $44,000 Dividend Paid -$4,100 Net Cash Used for Financing Activities -$22,500 Summary Cash Flow Statement Net Cash Available from Operating Activities $128,700 Net Cash Used for Investing Activities -$82,000 Net Cash Used for Financing Activities -$22,500 Increase in Cash and Cash Equivalents $24,200

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