Lock & Key Inc. began operations on January 1, 2019. Its post-closing trial balance at December 31, 2019 and 2020, is shown below along with some other information.

Other information regarding Lock & Key Inc. and its activities during 2020:

1. Assume all accounts have normal balances.

2. Cash dividends were declared and paid during the year.

3. Equipment was sold for cash equal to its book value.

Required

Using the information provided, prepare a statement of cash flows (applying the indirect method) for the year ended December 31, 2020.

Analysis Component: Assume that the investing activities section of the statement of cash flows showed a net cash outflow of $14 (thousand). What could this represent? Is a net cash outflow from investing activities necessarily favourable or unfavourable? Explain.

Transcribed Image Text:

Lock & Key Inc. Income Statement For Year Ended December 31, 2020 (000s) Lock & Key Inc. Post-Closing Trial Balance (000s) December 31 Revenues: Sales. Cost of goods sold. Gross profit. Expenses: Other expenses. 2020 Account Cash. Receivables. Merchandise inventory.. Property, plant, and equipment. Accumulated depreciation. Accounts payable.. Accrued liabilities. Bonds payable. Common shares. 2019 $2,160 $1,260 1,440 2,280 3,960 1,380 1,080 360 1,800 2,040 2,280 3,300 2,520 780 2,100 2,040 3,720 1,440 660 240 Depreciation expense. Total expenses Loss. 1,440 240 1,680 900 $ 120 3,084 2,136 Retained earnings.