14-46 P14.

9
SINJH SA
Statement of Cash Flows
For the Year Ended December 31, 2020

Cash flows from operating activities

Net income ................................................................................ €172,900
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation expense ..................................................... €45,000
Gain on disposal of plant assets ................................... (5,000)
Increase in accounts receivable .................................... (59,800)
Increase in inventory ...................................................... (9,650)
Increase in prepaid expenses ........................................ (3,300)
Increase in accounts payable ........................................ 44,700
Decrease in accrued expenses payable ........................ (500) 11,450
Net cash provided by operating activities................. 184,350
Cash flows from investing activities
Sale of equipment .................................................................... 12,500
Purchase of long-term investments ........................................ (26,000)
Purchase of equipment ............................................................ (80,000 )
Net cash used by investing activities ............................ (93,500)

Cash flows from financing activities

Sale of ordinary shares ............................................................ 45,000
Redemption of bonds............................................................... (40,000)
Payment of cash dividends ..................................................... (43,900 )
Net cash used by financing activities............................ (38,900)

Net increase in cash .......................................................................... 51,950

Cash at beginning of period .............................................................. 48,400
Cash at end of period ........................................................................ 100,350
14-47 P14.11
AMARAL REIS SA
Statement of Cash Flows
For the Year Ended December 31, 2020

Cash flows from operating activities

Net income .................................................................. R$ 48,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation expense........................................................ R$40,000
Loss on disposal of plant asset ....................................... 6,000
Decrease in accounts receivable ..................................... 16,000
Increase in inventory ......................................................... (12,550)
Decrease in prepaid expenses ......................................... 2,720
Increase in accounts payable ........................................... 6,350 58,520
Net cash provided by operating activities ..................... 106,520

Cash flows from investing activities

Sale of land ............................................................................... 20,000
Sale of equipment .................................................................... 6,000
Purchase of equipment ............................................................ (95,000)
Net cash used by investing activities ............................ (69,000)

Cash flows from financing activities

Payment of cash dividends ..................................................... (20,000)
Net cash used by financing activities............................ 20,000)

Net increase in cash .......................................................................... 17,520

Cash at beginning of period .............................................................. 45,000
Cash at end of period ........................................................................ 62,520

Note:
Non-cash investing and financing activities
Exchange of ordinary shares for land..................................... R$ 35,000
Newman Corporation's comparative statements of financial position are presented below.
NEWMAN CORPORATION
Comparative Statement of Financial Position
December 31
2020 2019
Equipment $ 60,000 $ 70,000
Accumulated depreciation (14,000) (10,000)
Investments 25,000 16,000
Accounts receivable 25,200 22,300
Cash 12,200 17,700
Total $108,400 $116,000

Share capital-ordinary $ 50,000 $ 45,000

Retained earnings 33,800 29,900
Bonds payable 10,000 30,000
Accounts payable 14,600 11,100
Total $108,400 $116,000

Additional information:
1. Net income was $19,300. Dividends declared and paid were $15,400.
2. Equipment which cost $10,000 and had accumulated depreciation of $2,200 was sold for
$3,800.
3. All other changes in non-current account balances had a direct effect on cash flows, except
the change in accumulated depreciation.

Instruction:
Prepare a statement of cash flows for 2020 using the indirect method.

Answer:

NEWMAN CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2020
____________________________________________________________________________
Cash flows from operating activities
Net income .................................................................... $19,300
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation expense ......................................... $ 6,200
Loss on disposal of equipment ............................ 4,000
Increase in accounts payable .............................. 3,500
Increase in accounts receivable .......................... (2,900) 10,800
Net cash provided by operating activities ....................... 30,100
Cash flows from investing activities
Sale of equipment .......................................................... 3,800
Purchase of investments................................................ (9,000)
Net cash used by investing activities ............................. (5,200)
Cash flows from financing activities
Issuance of ordinary shares ........................................... 5,000
Retirement of bonds ...................................................... (20,000)
Payment of dividends .................................................... (15,400)
Net cash used by financing activities ............................. (30,400)
Net decrease in cash ................................................................. (5,500)
Cash at beginning of period ....................................................... 17,700
Cash at end of period ................................................................. $ 12,200