(a)
Introduction:
Statements of
To prepare:
Cash flow statement using indirect method.
(b)
Introduction:
Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.
To state:
The way with which company can keep a control over its cash in the future.
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Managerial Accounting
- Consultex, Inc., was founded in 2015 as a small financial consulting business. The company had done reasonably well in 2015-2017 but started noticing its cash dwindle early in 2018. In January 2018, Consultex had paid $16,500 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,100 cash for dividends and $1,100 to repurchase and eliminate Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $5,100 by signing a new promissory note in May and also issued stock to a new private investor for $12,100 cash. Year-end comparative balance sheets and income statements are presented below. CONSULTEX, INc. Balance Sheet October 31 2018 2017 Assets Cash $ 9,850 $13,300 12,100 3,100 11,000 $53,600 $39,500 Accounts Receivable 14,200 2,050 Prepaid Rent Land et al 27,500 Total Assets Liabilities and Stockholders' Equity Salaries and Wages Payable Income Taxes Payable Notes Payable (long-term) $…arrow_forwardConsultex, Inc., was founded in 2015 as a small financial consulting business. The company had done reasonably well in 2015–2017 but started noticing its cash dwindle early in 2018. In January 2018, Consultex had paid $15,000 to purchase land and repaid $3,000 principal on an existing promissory note. In March, the company paid $1,800 cash for dividends and $1,000 to repurchase and eliminate Consultex stock that had previously been issued for $1,000. To improve its cash position, Consultex borrowed $4,800 by signing a new promissory note in May and also issued stock to a new private investor for $11,800 cash. Year-end comparative balance sheets and income statements are presented below.arrow_forwardPlease give a detailed analysis of the financial statements given below for Joshua & White Technologies. Your analysis should include answers to the questions as follows (not limited to these questions): Has the company’s liquidity position improved or worsened? Has the company’s ability to manage its assets improved or worsened? How has the company’s profitability changed during the last year? Joshua & White Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2019 2018 Cash and cash equivalents $21,000 $20,000 Short-term investments 3,759 3,240 Accounts Receivable 52,500 48,000 Inventories 84,000 56,000 Total current assets $161,259 $127,240 Net fixed assets 223,097 200,000 Total assets $384,356 $327,240 Liabilities and equity Accounts payable $33,600 $32,000 Accruals 12,600 12,000…arrow_forward
- Cash flow identity. Use the data from the following financial statements in the popup window, . The company paid interest expense of $17,100 for 2017 and had an overall tax rate of 40% for 2017. Verify the cash flow identity: cash flow from assets = cash flow to creditors + cash flow to owners The cash flow from assets is $ 24,380. (Round to the nearest dollar.) The cash flow to creditors is $ 45000. (Round to the nearest dollar.) The cash flow to owners is $ (Round to the nearest dollar.)arrow_forwardCash flow identity. Use the data from the following financial statements in the popup window, . The company paid interest expense of $17,100 for 2017 and had an overall tax rate of 40% for 2017. Verify the cash flow identity: cash flow from assets = cash flow to creditors + cash flow to owners The cash flow from assets is $ 24,380. (Round to the nearest dollar.) The cash flow to creditors is $ (Round to the nearest dollar.)arrow_forwardOriole Company reported net income of $1.8 million in 2017. Depreciation for the year was $158,800, accounts receivable decreased $377,500, and accounts payable decreased $300,700. Compute net cash provided by operating activities using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Oriole Company Statement of Cash Flows-Indirect Approach For the Year Ended December 31, 2017 Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to Net Cash Provided by Operating Activities + Decrease in Account Receivable + 377500 Decrease in Account Payable (300700) Depreciation Expense 158800 Net Cash Provided by Operating Activitiesarrow_forward
- Cuero Co. reported a net loss of $30,000 for 2015, yet its cash balance increased during the year. Which financial statement should Cuero’s management refer to for an explanation of this situation? a. Balance sheetb. Income statementc. Statement of Retained Earnings d. Statement of Cash Flowsarrow_forwardCash flow identity. Use the data from the following financial statements the popup window,. The company paid interest expense of $17,700 for 2017 and had an overall tax rate of 40% for 2017. Verify the cash flow identity: cash flow from assets = cash flow to creditors + cash flow to owners The cash flow from assets is $ (Round to the nearest dollar.)arrow_forward(Computation of Operating Activities—Direct Method) Presented below are two independent situations.Situation A: Annie Lennox Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2017. Accounts receivable and accounts payable at year-end were $71,000 and $29,000, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.)InstructionsUsing the direct method, compute net cash provided by operating activities. Situation B: The income statement for Blues Traveler Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $26,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000.InstructionsCompute (a) cash payments to suppliers and (b) cash payments for operating expensesarrow_forward
- During 2018, the cash flows related to Global Data, Inc.'s lending and borrowing activities are summarized as follows: Cash lent to borrowers Payment to retire bonds payable Proceeds from borrowing at bank (note payable) Interest received from borrowers Interest payments made on bonds payable SS S A Moving to the next question prevents changes to this answer. S S If Global Data's income statement for 2018 reports interest expense of $25,200, then Interest Payable decreased by $15,800 O True O False 132,600 367,500 220,500 31,500 41,000 Daning 2015, the cash flowy related to Global Dhes, lac's leading and borrowing activities are varied as follows Cash letto borrowers Payment to rebods payable Proceeds free borrowing at back cote payable) Interest received from borrowers we pays de onbeads payable True Ĉ D S S 5 367,500 220.500 31.500 41,000arrow_forwardUsing the information below, calculate Cabana Co.’s Net Operating Cash Flow for 2017. It is not necessary to produce a complete Statement of Cash Flows – only Net Operating Cash Flow is required. 2016 2017 Net Income $100,000 $110,000 Accounts Receivable 80,000 70,000 Accounts Payable 15,000 30,000 Prepaid Expenses 5,000 7,000 Inventory 20,000 30,000 Unearned Revenue 5,000 1,000 PP&E 200,000 220,000 Depreciation Expense 20,000 25,000arrow_forwardXS Supply Company is developing its annual financial statements at December 31, 2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized: 2017 2016 Balance Sheet at December 31 Cash $ 37,120 $ 30,800 Accounts Receivable 37,850 30,800 Merchandise Inventory 47,900 40,900 Property and Equipment 175,250 132,000 Less: Accumulated Depreciation (38,250 ) (33,000 ) $ 259,870 $ 201,500 Accounts Payable $ 42,850 $ 32,500 Wages Payable 1,430 2,050 Note Payable, Long−Term 32,700 44,100 Contributed Capital 104,500 80,600 Retained Earnings 78,390 42,250 $ 259,870 $ 201,500 Income Statement for 2017 Sales $ 202,000 Cost of Goods Sold…arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning