Concept explainers
Integration of financial statements; Chapters 3 and 4
• LO4–8
The chief accountant for Grandview Corporation provides you with the company’s 2018 statement of
Required:
1. Calculate the missing amounts.
2. Prepare the operating activities section of Grandview’s 2018 statement of cash flows using the indirect method.
(1)
Financial statement:
A financial statement is the complete record of financial transactions that take place in a company at a particular point of time. It provides important financial information regardingthe assets, liabilities, revenues and expenses of the company to its internal and external users. It helps them to know the exact financial position of the company.
To calculate: the missing amounts.
Explanation of Solution
Calculate the missing amounts.
Cash Balance – 2017:
Accounts receivable-2018:
Inventory – 2018:
Calculate the purchase:
Calculate Inventory – 2017:
Accumulated Depreciation – 2017:
Calculate total assets:
Total Assets | 2018($) | 2017($) |
Cash | 145 | 59 |
Accounts Receivable | 93 | 84 |
Investments | - | 50 |
Inventory | 60 | 52 |
Property, plant, and equipment | 150 | 150 |
Less: Accumulated Depreciation | (65) | (55) |
Total Assets | $383 | $340 |
Table (1)
Calculate Income tax payable – 2017
Calculate retained earnings -2018:
Calculate total liabilities and shareholders’ equity:
Total Liabilities and Stockholder’s Equity | 2018($) | 2017($) |
Accounts payable to suppliers | 40 | 30 |
Payables for selling and administrative expenses | 9 | 9 |
Income taxes payable | 22 | 24 |
Common stock | 240 | 230 |
Retained earnings | 72 | 47 |
Total Assets | $383 | $340 |
Table (2)
(2)
To prepare: Operating activities section of Corporation G’s cash flow statement using indirect method.
Explanation of Solution
Prepare the operating activities of Corporation G for 2018 statement of cash flows using indirect method.
Corporation G | ||
Statement of Cash Flows - Indirect Method (Partial) | ||
For the Year 2018 | ||
Particulars | Amount ($) | Amount ($) |
Cash flows from Operating activities: | ||
Net income | 28 | |
Adjustments for noncash effects: | ||
Depreciation expense | 10 | |
Gain on sale of investments | (15) | |
Changes in operating assets and liabilities | ||
Increase in accounts receivable(1) | (9) | |
Increase in inventory(2) | (8) | |
Increase in accounts payable(3) | 10 | |
Decrease in income taxes payable(4) | (2) | (14) |
Net cash flows from operating activities | $14 |
Table (3)
Working notes:
Determine changes of assets and liabilities:
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Chapter 4 Solutions
INTERMEDIATE ACCOUNTING RMU 9TH EDITION
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