The 2020 comparative balance sheet and income statement of Shock Electricity Inc. follow: Shock Electricity had no
Question:
The 2020 comparative balance sheet and income statement of Shock Electricity Inc. follow:
Shock Electricity had no non-cash investing and financing transactions during 2020. During the year, there were no sales of land or electrical equipment, no issuances of notes payable, and no repurchase of common shares.
Required
1. Prepare the cash flow statement by the indirect method for 2020.
2. Evaluate the cash flow for this company.
SHOCK ELECTRICITY INC. Balance Sheet August 31, 2020 and 2019 Assets 2020 2019 Current assets Cash and cash equivalents $ 47,000 $ 156,000 Accounts receivable 415,000 431,000 Interest receivable 6,000 9,000 Inventory 993,000 899,000 Prepaid expenses 17,000 22,000 Electrical equipment, net 1,009,000 937,000 Land 401,000 200,000 Total assets $2,888,000 $2,654,000 Liabilities Current liabilities Accounts payable $ 114,000 $ 179,000 Interest payable 63,000 67,000 Salaries payable 71,000 14,000 Lease liabilities 181,000 187,000 Income tax payable 73,000 38,000 Long-term liabilities Notes payable Shareholders' equity 450,000 650,000 Common shares 1,411,000 1,223,000 Retained earnings 525,000 296,000 Total liabilities and shareholders' equity $2,888,000 $2,654,000
Step by Step Answer:
ANSWER 1 Calculation of Cash Flows from Operating Activities Net Income 466000 Add Depreciation and ...View the full answer
Horngrens Accounting
ISBN: 9780135359785
11th Canadian Edition Volume 2
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood
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In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
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