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The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: Service revenue Operating expenses Income before income taxes $ 980, e00 740,000 240,000 60,000 Income tax expense Net income $ 180, e00 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 347,000 128,000 78,e00 14,000 Cash Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable $74,000 104, e00 64,000 23, еее In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 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.

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: Service revenue Operating expenses Income before income taxes $ 980, e00 740,000 240,000 60,000 Income tax expense Net income $ 180, e00 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 347,000 128,000 78,e00 14,000 Cash Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable $74,000 104, e00 64,000 23, еее In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 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.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
Problem 12P
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Required 1 Required 2 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.) DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows For the Year Ended December 31, 2021 Cash flows from operating activities: Net cash flows from operating activities 2$ Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Increase in cash Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $
Transcribed Image Text:Required 1 Required 2 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.) DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows For the Year Ended December 31, 2021 Cash flows from operating activities: Net cash flows from operating activities 2$ Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Increase in cash Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: $ 980,000 740, 000 240, 000 60,000 Service revenue Operating expenses Income before income taxes Income tax expense Net income $ 180,000 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 74,000 104, 000 64,000 23,000 Cash $ 347,000 Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable 128,000 78,000 14,000 In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 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.
Transcribed Image Text:The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below: $ 980,000 740, 000 240, 000 60,000 Service revenue Operating expenses Income before income taxes Income tax expense Net income $ 180,000 The following balance sheet information also is available: 12/31/2021 12/31/2020 $ 74,000 104, 000 64,000 23,000 Cash $ 347,000 Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable 128,000 78,000 14,000 In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 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.
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