9/11/2019 Assignment Print View
Score: 19.82/20 Points 99.10 %
9/11/2019 Assignment Print View
9. Award: 4 out of 4.00 points
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service revenue $ 1,140,000
Operating expenses 820,000
Income before income taxes 320,000
Income tax expense 80,000
Net income $ 240,000
The following balance sheet information also is available:
12/31/2021 12/31/2020
Cash $ 431,000 $ 82,000
Accounts receivable 144,000 112,000
Accrued liabilities (for operating expenses) 94,000 72,000
Income taxes payable 22,000 39,000
In addition, the following transactions took place during the year:
1.Common stock was issued for $124,000 in cash.
2.Long-term investments were sold for $62,000 in cash. The original cost of the investments also was $62,000.
3.$92,000 in cash dividends was paid to shareholders.
4.The company has no outstanding debt, other than those payables listed above.
5.Operating expenses include $42,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating
activities.
2. Prepare the cash flows from operating activities section of Diversified’s 2021 statement of cash flows using the indirect method.
9/11/2019 Assignment Print View
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting
operating activities. (Amounts to be deducted should be indicated with a minus sign.)
Required 1
Required 2
DIVERSIFIED PORTFOLIO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash flows from operating activities:
Cash received from customers
$1,108,000
Cash paid for operating expenses
(756,000)
Cash paid for income taxes
(97,000)
Net cash flows from operating activities $ 255,000
Cash flows from investing activities:
Sale of investments
62,000
Net cash flows from investing activities 62,000
Cash flows from financing activities:
Dividends paid to shareholders
(92,000)
Issuance of common stock
124,000
Net cash flows from financing activities 32,000
Increase in cash 349,000
Cash and cash equivalents, January 1 82,000
Cash and cash equivalents, December 31 $ 431,000
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service revenue $ 1,140,000
Operating expenses 820,000
Income before income taxes 320,000
Income tax expense 80,000
Net income $ 240,000
The following balance sheet information also is available:
12/31/2021 12/31/2020
Cash $ 431,000 $ 82,000
Accounts receivable 144,000 112,000
9/11/2019 Assignment Print View
Income taxes payable 22,000 39,000
In addition, the following transactions took place during the year:
1.Common stock was issued for $124,000 in cash.
2.Long-term investments were sold for $62,000 in cash. The original cost of the investments also was $62,000.
3.$92,000 in cash dividends was paid to shareholders.
4.The company has no outstanding debt, other than those payables listed above.
5.Operating expenses include $42,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating
activities.
2. Prepare the cash flows from operating activities section of Diversified’s 2021 statement of cash flows using the indirect method.
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting
operating activities. (Amounts to be deducted should be indicated with a minus sign.)
Required 1
Required 2
$
DIVERSIFIED PORTFOLIO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash flows from operating activities:
Cash received from customers 1,108,000
Cash paid for operating expenses (756,000)
Cash paid for income taxes (97,000)
Net cash flows from operating activities
Cash flows from investing activities:
Sale of investments 62,000
Net cash flows from investing activities
Cash flows from financing activities:
Issuance of common stock 124,000
Dividends paid to shareholders (92,000)
Net cash flows from financing activities
Increase in cash
Cash and cash equivalents, January 1 82,000
Cash and cash equivalents, December 31
$ 255,000
62,000
32,000
349,000
$ 431,000
F
F
F
F
F
Explanation:
1.
Cash received from customers = $1,108,000
$1,140,000 in service revenue less $32,000 increase in accounts receivable.
Cash paid for operating expenses = $(756,000)
$820,000 in operating expenses less $42,000 in depreciation less $22,000 increase in accounts payable.
