4.3.2: Disclosure Requirements
- Page ID
- 100409
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- Required disclosures:
Following is the completed statement of cash flows, including disclosures, for Watson Ltd., for the year ended December 31, 2020:
Watson Ltd. Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from operating activities Net income (loss) $ 77,000 Non-cash items (adjusted from net income): Depreciation expense 43,000 Gain from sale of equipment (5,000) Cash in (out) from operating working capital: Increase in trading investments (2,000) Increase in accounts receivable (84,510) Decrease in notes receivable 3,550 Increase in inventory (58,970) Increase in prepaid expenses (3,450) Increase in accounts payable 143,000 Decrease in interest payable (8,400) Decrease in income taxes payable (5,880) Decrease in unearned revenue (200,000) Net cash from operating activities (101,660) Cash flows from investing activities Purchase of AC investments (30,750) Sales proceeds from sale of building 55,000 Sales proceeds from sale of patent 14,300 Net cash from investing activities 38,550 Cash flows from financing activities Repayment of long-term note (19,000) Proceeds from shares issuance 182,200 Dividends paid (42,590) Net cash from financing activities 120,610 Net increase (decrease) in cash 57,500 Cash, January 1 250,000 Cash, December 31 $ 307,500 Disclosures: Cash paid for income taxes $ 38,880 (60,000 + 33,000 − 54,120) Cash paid for interest charges 11,400 (33,000 + 3,000 − 24,600) Cash received for interest income 2,000 Cash received for dividend income 3,000 [There were no non-cash transactions to disclose.]