Use the Following Financial Statements and Additional Information to (1)prepare

question 30

Essay

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:

Welfare Economics

Welfare Economics is a branch of economics that focuses on the optimal allocation of resources and goods to maximize the social welfare or well-being of the community.

Efficient Allocation

An optimal distribution of resources in an economy, where goods and services are distributed according to consumer preferences with minimal waste.

Marginal Rate

A measure or rate of change of a variable (such as cost or benefit) as a result of a unit change in another variable.

Utility Function

A utility function is a mathematical representation of a consumer's preference structure, showing how different bundles of goods and services translate into levels of satisfaction or utility.