Financial Accounting Problem

QUESTION

 

P 14–6
The following income statement and balance sheet have been
prepared for Obelisk Corporation at December 31, 2020, after its first
year of operations.
Assets
Current
Cash
Accounts receivable
Inventory
Prepaid rent
Plant assets
Equipment
Accum. dep’n
$ 45
100
60
10 215
160
(44) 116
$331
Liabilities
Current
Accounts payable
Dividends payable
Income taxes payable
Non‐current borrowings
$ 50
5
8 63
80
143
Stockholders’ equity
Common stock
Retained earnings
140
48 188
$331
Sales
Cost of goods sold
Gross profit
Selling and administration
Rent
Depreciation
Income from operations
Gain on sale of land
Income before income taxes
Income taxes
Net income
$225
92
133
$39
44 83
57
20
77
7
$ 70
CHAPTER FOURTEEN/ The Statement of Cash Flows First US Edition

Additional information:
a.
b.
Obelisk assumed $100 of long‐term debt during the year for cash.
The company issued common stock for equipment, $40. Other
equipment was purchased for $120 cash. No equipment was sold
during the year.
Land costing $30 was purchased, then sold during the year for $50.
Some borrowings were repaid during the year for $20 cash.
The company declared dividends of $15 during the year.
c.
d.
e.
Required:
1.
2.
Prepare a statement of cash flows.
Explain what the statement of cash flows tells you about Obelisk
Corporation.
(Appendix) Prepare a cash flow table and a revised operating
activities section of the SCF. Show that cash effects net to a $45
inflow.
3.