Refer to the data in QS 16-7. 

1. Assume that all common stock is issued for cash. What amount of cash dividends is paid during 2021? 

2. Assume that no additional notes payable are issued in 2021. What cash amount is paid to reduce the notes payable balance in 2021?

Data From QS 16-7

Required

Use the indirect method to prepare the operating activities section of Cruz’s statement of cash flows.

Transcribed Image Text:

CRUZ, INC. Comparative Balance Sheets At December 31 2021 2020 Assets Cash .. $ 94,800 $ 24,000 Accounts receivable, net. 41,000 51,000 Inventory.... 85,800 95,800 Prepaid expenses.. 5,400 4,200 Total current assets 227,000 175,000 Furniture.... 109,000 119,000 Accum. depreciation-Furniture.... (17,000) (9,000) Total assets... $319,000 $285,000 CRUZ, INC. Income Statement Liabilities and Equity For Year Ended December 31, 2021 Accounts payable... $ 15,000 $ 21,000 Wages payable.. 9,000 5,000 Sales ... $488,000 Income taxes payable 1,400 2,600 Cost of goods sold . 314,000 Total current liabilities 25,400 28,600 Gross profit..... 174,000 Notes payable (long-term)... Total liabilities... 29,000 69,000 Operating expenses (excluding depreciation) 54,400 97,600 89,100 ...... Depreciation expense 37,600 Equity ... Common stock, $5 par value... Retained earnings... Income before taxes. 47,300 229,000 179,000 Income taxes expense.. 17,300 35,600 8,400 Net income ... $ 30,000 Total liabilities and equity. $319,000 $285,000