Statement of Cash Flows - Direct Method
Based on an analysis of the cash and other accounts, the following information was provided by the controller of Black Iron, Inc., a manufacturer of wood-burning stoves, for the year 20Y1.
A) Cash sales for the year were $210,000; sales on account totaled $240,000.
B) Cost of goods sold was 50% of total sales.
C) All inventory is purchased on account.
D) Depreciation on equipment was $86,000 for the year.
E) Amortization of patent was $9,000.
F) Collection of accounts receivable was $98,000.
G) Payments on accounts payable for inventory equaled $123,000.
H) Rent expense paid in cash was $42,000.
I) Cash of $580,000 was obtained by issuing 40,000 shares of $10 par stock.
J) Land worth $425,000 was acquired in exchange for a $400,000 bond.
K) Equipment was purchased for cash at a cost of $287,000.
L) Dividends of $115,000 were declared.
M) Dividends of $52,000 that had been declared the previous year were paid.
N) A machine used on the assembly line was sold for $26,000. The machine had a book value of $19,000.
O) Another machine with a book value of $2,300 was scrapped and was reported as an ordinary loss. No cash was received on this transaction.
P) The cash account had a balance of $79,000 on January 1, 20Y1.
Use the direct method to prepare a statement of cash flows for Black Iron, Inc., for the year ended December 31, 20Y1. When required, use the minus sign to indicate cash outflows, any cash payments or a decrease in cash.