Preparation of Statement of Cash Flows (Indirect Method)

question 50

Essay

Preparation of statement of cash flows (indirect method)
The net changes in the statement of financial position accounts of Brown Derby Corp. for calendar 2020 are shown below. Brown Derby adheres to ASPE.
1. On January 2, 2020, FV-NI investments costing $ 121,000 were sold for $ 150,000.
2. The company paid the cash dividend on February 1, 2020, and distributed the stock dividend on August 1, 2020.
3. Accounts receivable of $ 16,200 and $ 19,400 were considered uncollectible and written off in 2020 and 2019, respectively.
4. Major repairs of $ 25,000 to the equipment were debited to the Plant and Equipment account during the year.
5. The 100% owned subsidiary reported a net loss for the year of $ 20,000.
6. At January 1, 2020, the cash balance was $ 136,000.
7. Long-term bonds were issued at par.
Instructions
Prepare a statement of cash flows (indirect method) for calendar 2020.

Recognize the function of markets and the movement of resources and goods.

Appreciate the significance of production possibility frontiers (PPFs) and opportunity cost.

Understand economic efficiency, including allocative and productive efficiency.

Identify the role and rationale behind economic models and simplifications.

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that suppliers are willing to sell.

Pizza

A popular dish of Italian origin consisting of a round, flat base of dough topped with tomatoes, cheese, and various other ingredients baked at a high temperature.

Supply Curve

A graphical representation that illustrates the amount of product businesses are willing to produce and sell at different price points.

Decrease in Supply

A situation where the quantity of a good that producers are willing and able to sell at a given price level falls, often due to factors like increased production costs or natural disasters.