Preparing Statement of Cash Flows The accounting records of Zale Inc. provided the following data for the current year. Balance Sheet, December 31 2019 2020 Difference Cash $100 $265 $165 Accounts receivable 300 200 (100) Merchandise inventory 100 300 200 Equipment, net 1,800 2,100 300 Total assets $2,300 $2,865 $565 Accounts payable $275 $240 $(35) Salaries payable 50 25 (25) Bonds payable 600 800 200 Common stock (no-par) 1,100 1,200 100 Retained earnings 275 600 325 Total liabilities andstockholders’ equity $2,300 $2,865 $565 Income Statement, For Year Ended December 31 2020 Revenues $3,000 Cost of goods sold 1,700 Depreciation 400 Other expenses 385 Net income $515 Additional information for 2020 1. Equipment was sold for its book value of $500. 2. Equipment was purchased during the year for $1,200. 3. Dividends declared and paid were $190. Required Prepare the 2020 statement of cash flows following the indirect method in presenting cash flows from operating activities. Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from operating activities Net income Adjustments: Decrease in accounts receivable Increase in merchandise inventory Decrease in accounts payable Decrease in salaries payable Net cash provided (used) by operating activities Cash flows from investing activities Sale of equipment Net cash provided (used) by investing activities Cash flows from financing activities Issuance of common stock Cash paid for dividends Net cash provided (used) by financing activities Net increase in cash during 2020 Cash, January 1, 2020 Cash, December 31, 2020

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 32BE

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Preparing Statement of Cash Flows

The accounting records of Zale Inc. provided the following data for the current year.

Balance Sheet, December 31	2019	2020	Difference
Cash	$100	$265	$165
Accounts receivable	300	200	(100)
Merchandise inventory	100	300	200
Equipment, net	1,800	2,100	300
Total assets	$2,300	$2,865	$565
Accounts payable	$275	$240	$(35)
Salaries payable	50	25	(25)
Bonds payable	600	800	200
Common stock (no-par)	1,100	1,200	100
Retained earnings	275	600	325
Total liabilities andstockholders’ equity	$2,300	$2,865	$565

Income Statement, For Year Ended December 31	2020
Revenues	$3,000
Cost of goods sold	1,700
Depreciation	400
Other expenses	385
Net income	$515

Additional information for 2020

1. Equipment was sold for its book value of $500.

2. Equipment was purchased during the year for $1,200.

3. Dividends declared and paid were $190.

Required

Prepare the 2020 statement of cash flows following the indirect method in presenting cash flows from operating activities.

Statement of Cash Flows For the Year Ended December 31, 2020
Cash flows from operating activities
Net income
Adjustments:

Decrease in accounts receivable
Increase in merchandise inventory
Decrease in accounts payable
Decrease in salaries payable
Net cash provided (used) by operating activities
Cash flows from investing activities

Sale of equipment
Net cash provided (used) by investing activities
Cash flows from financing activities

Issuance of common stock
Cash paid for dividends
Net cash provided (used) by financing activities
Net increase in cash during 2020
Cash, January 1, 2020
Cash, December 31, 2020

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