The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows:
Additional data obtained from the records of Prime Sports Gear are as follows:
- a. Net income for 2013 was $121,610.
- b.
Depreciation reported on income statement for 2013 was $46,500. - c. Purchased $165,000 of new equipment, putting $90,000 cash down and issuing $75,000 of bonds for the balance.
- d. Old equipment originally costing $19,500, with
accumulated depreciation of $7,950, was sold for $8,000. - e. Retired $60,000 of bonds.
- f. Declared cash dividends of $64,000.
- g. Issued 1,500 shares of common stock at $27 cash per share.
Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next.
According to the problem, cash increased from $39,600 to $67,210 during the year. This is a $27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to $67,210, its proper balance.
Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here.
The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree.
The next account balance that changed is accounts receivable. It increased by $9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to $121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows “Net income” as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important.
All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them.
The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one.
You will be done with your analysis when:
- a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data.
- b. The transaction column totals are equal (cells D60 and F60).
- c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59).
When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), $860,460.
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Excel Applications for Accounting Principles
- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. The worksheet has been designed so that as you make entries in columns D and F, column G will be automatically updated. For example, FORMULA1 should be entered as =B17+D17F17. Columns C and E are to be used to enter letter references for each of the debit and credit entries on the worksheet.arrow_forwardFinancial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 Sales $ 1,625.0 $ 2017 1,300.0 Operating costs excluding depreciation and amortization 1,300.0 1,105.0 EBITDA $ 325.0 $ 195.0 Depreciation and amortization 39.0 31.0 Earnings before interest and taxes (EBIT) $ 286.0 $ 164.0 Interest 36.0 29.0 Earnings before taxes (EBT) $ 250.0 $ 135.0 Taxes (40%) 100.0 54.0 Net income $ 150.0 $ 81.0 Common dividends $ 135.0 $ 65.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 Assets Cash and equivalents $ 23.0 $ 2017 18.0 Accounts receivable 164.0 143.0 Inventories 343.0 312.0 Total current assets $ 530.0 $ 473.0 Net plant and equipment 390.0 312.0 Total assets $ 920.0 $ 785.0 Liabilities and Equity…arrow_forwardCardinal Industries had the following operating results for 2018: Sales = $34,318; Cost of goods sold = $24,212; Depreciation expense = $5,997; Interest expense = $2,710; Dividends paid = $1,996. At the beginning of the year, net fixed assets were $19,940, current assets were $7,054, and current liabilities were $3,992. At the end of the year, net fixed assets were $24,502, current assets were $8,684, and current liabilities were $4,673. The tax rate for 2018 was 22 percent. a. What is net income for 2018? (Do not round intermediate calculations.) b. What is the operating cash flow for 2018? (Do not round intermediate calculations.) c. What is the cash flow from assets for 2018? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) d-1. If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.) d-2. If no new debt was issued during the year, what is the cash flow…arrow_forward
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- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning