Use the Following Calendar-Year Information to Prepare Adam Company's Statement

question 107

Essay

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.
$\begin{array}{|l|r|}\hline\text { Cash paid to purchase machinery } & \$ 124,000 \\\hline \text { Cash paid for merchandise inventory } & 220,000 \\\hline \text { Cash paid for operating expenses } & 280,000 \\\hline \text { Cash paid for interest } & 4,000 \\\hline \text { Cash received for interest } & 10,000 \\\hline \text { Cash proceeds from sale of land } & 15,000 \\\hline \text { Cash balance at beginning of year } & 77,000 \\\hline \text { Cash balance at end of year } & 25,000 \\\hline \text { Cash borrowed on a short-term note } & 24,000 \\\hline \text { Cash dividends paid } & 57,000 \\\hline \text { Cash received from stock issuance } & 522,000\\\hline\end{array}$

---

Definitions:

Process Costing System

A method of costing used where identical or similar items are produced in mass, costs are accumulated for a fixed period and assigned to all units produced.

FIFO Method

"First In, First Out" inventory valuation method where goods purchased or produced first are sold or used first.

Inventory Costing

A method used to assign costs to inventory items, which affects the cost of goods sold reported and the inventory's valuation on the balance sheet.

General Journal Entries

Accounting records that document all the financial transactions of a company, used to transfer information to the master ledger.