Matthauson Company Has the Following Comparative Balance Sheet Data Available

question 128

Essay

Matthauson Company has the following comparative balance sheet data available:
Additional information:
1. The company reports net income of $100,000 and depreciation expense of $20,000 for the year ending December 31, 2017.
2. Dividends declared and paid in 2017, $70,000.
3. Equipment with a cost of $20,000 and accumulated depreciation of $10,000 was sold for $3,000.
4. New equipment was purchased for cash.
5. No common stock was retired during 2017.
The company also reports the following income statement for the year ending December 31, 2017:
Using the direct method, prepare the statement of cash flows for the year ending December 31, 2017.

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Definitions:

New Corporation

A business entity that has recently been registered and commenced operations, typically characterized by its fresh market entry.

Property

Property is a legally recognized right to possess, use, and dispose of an item, land, or intellectual creation.

Involuntary Dissolution

The forced termination of a corporation or partnership by external action, often by government order.

Insolvent

The state of being unable to pay debts owed, with liabilities exceeding assets.