Brown Company, had the following statements prepared as of December 31, 2020.Brown CompanyComparative Balance SheetAs of December 31, 2020 and 2019 12/31/20 12/31/19 Cash$160,800 $38,400 Accounts receivable123,200 49,000 Inventory112,500 57,900 investments (available-for-sale)90,000 101,000 factory assets240,000 212,500 Total assets$726,500 $458,800 Accounts payable$100,000 $65,200 mortgage debt50,000 77,000 accumulated depreciation30,000 52,000 Common stock175,000 131,100 Retained earnings371,500 133,500 Total liabilities and stockholders' equity$726,500 $458,800 Brown CompanyIncome StatementFor the Year Ending December 31, 2020Sales revenue $440,000 Interest and other income (Including gain on sale of investment $5,000) 20,000 460,000Less: Cost of goods sold 130,000 Selling and administrative expenses 10,000 Depreciation 42,000 income tax 5,000 Interest expense$3,000 Less on sale of factory assets12,000 202,000 Net profit 258,000 Cash dividend 20,000 retained earnings in business 238,000 Additional information:New factory assets valued at $85,000 in principal were purchased during the year. $20,000 worth of common stock was issued in exchange for the Factory assets. Investments have been sold in the current year. No unrealized gains or losses have arisen from these securities.InstructionsPrepare a statement of cash flows using the indirect method.

Prepare the cash flow statement under the indirect method as follows: -

Answered: 123,200 49,000 Inventory…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

See similar textbooks

Related questions

Question

Brown Company, had the following statements prepared as of December 31, 2020.

Brown Company Comparative Balance Sheet As of December 31, 2020 and 2019
	12/31/20	12/31/19
Cash	$160,800	$38,400
Accounts receivable	123,200	49,000
Inventory	112,500	57,900
investments (available-for-sale)	90,000	101,000
factory assets	240,000	212,500
Total assets	$726,500	$458,800
Accounts payable	$100,000	$65,200
mortgage debt	50,000	77,000
accumulated depreciation	30,000	52,000
Common stock	175,000	131,100
Retained earnings	371,500	133,500
Total liabilities and stockholders' equity	$726,500	$458,800

Brown Company Income Statement For the Year Ending December 31, 2020
Sales revenue		$440,000
Interest and other income (Including gain on sale of investment $5,000)		20,000		460,000
Less:
Cost of goods sold		130,000
Selling and administrative expenses		10,000
Depreciation		42,000
income tax		5,000
Interest expense	$3,000
Less on sale of factory assets	12,000		202,000
Net profit			258,000
Cash dividend			20,000
retained earnings in business			238,000

Additional information:

New factory assets valued at $85,000 in principal were purchased during the year. $20,000 worth of common stock was issued in exchange for the Factory assets. Investments have been sold in the current year. No unrealized gains or losses have arisen from these securities.

Instructions

Prepare a statement of cash flows using the indirect method.

Expert Solution

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

123,200 49,000 Inventory 112,500 57,900