Use the following financial statements and additional information to (1)prepare a statement of cash flows for the year ended December 31,20X2 using the indirect method,and (2)compute the company's cash flow on total assets ratio for 20X2.
Additional Information
a.A $20,000 note payable is retired at its carrying value in exchange for cash.
b.The only changes affecting retained earnings are net income and cash dividends paid.
c.New equipment is acquired for $120,000 cash.
d.Received cash for the sale of equipment that had cost $85,000,yielding a gain of $4,700.
e.Prepaid expenses relate to Other Expenses on the income statement.
f.All purchases and sales of merchandise inventory are on credit.
Definitions:
Bounded Rationality
A concept in decision-making that suggests individuals are limited in their ability to process information, leading to satisficing rather than optimal decisions.
Groupthink
A phenomenon in decision-making where the desire for consensus within a group can lead to poor choices and suppress dissenting viewpoints.
Divergent Thinking
A mental strategy or procedure aimed at fostering innovative ideas by investigating a wide range of possible options.
Verification Stage
A phase in various processes where the validity or accuracy of something is checked or confirmed, often used in the context of testing or quality assurance.
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