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Comprehensive Statement of Cash Flows Questions

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23 views4 pages

Comprehensive Statement of Cash Flows Questions

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rolandocaypuno
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© © All Rights Reserved
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Statement of Cash Flows – Indirect Method

For the Year Ended December 31, 20XX


Cash flows from operating activities Amount (xxx)

Net income xxx

Adjustments to reconcile net income to net


cash provided by operating activities:

Depreciation, amortization, and depletion xxx

Loss (gain) on sale of fixed assets xxx

Exchange (gain) loss xxx

Increase (decrease) in payables xxx

Increase (decrease) in current/operating xxx


liabilities

Decrease (increase) in receivables xxx

Decrease (increase) in current/operating xxx


assets

Net cash provided by (used in) operating xxx


activities

Cash flows from investing activities Amount (xxx)

Sale (purchase) of property, plant, and xxx


equipment

Sale (purchase) of debt/equity securities of xxx


other entities

Collection of loans from (loans to) other xxx


entities

Net cash provided by (used in) investing xxx


activities
Cash flows from financing activities Amount (xxx)

Issuance (purchase) of entity’s securities xxx

Issuance (redemption) of debt xxx

(Payments of dividends) xxx

Net cash provided by (used in) financing xxx


activities

Net increase (decrease) in cash during the xxx


period

Add: Cash, beginning of the period xx

Cash, end of the period XXX


Illustration of the Indirect Method

Comparative Balance Sheets as of December 31

Assets Year 2 Year 1 Change

Cash $27,000 $20,000 $7,000

Accounts receivable $25,000 $30,000 ($5,000)

Inventory $34,000 $24,000 $10,000

Prepaid expenses $5,000 $2,000 $3,000

Machine $120,000 $80,000 $40,000

Accumulated ($30,000) ($18,000) ($12,000)


depreciation -
Machine

Totals $181,000 $138,000 $43,000

Liabilities and
Equity

Accounts payable $12,000 $20,000 ($8,000)

Loan $0 $20,000 ($20,000)

Common stock $79,000 $38,000 $41,000

Retained earnings $70,000 $40,000 $30,000

Totals $181,000 $138,000 $43,000

Income Statement for the Year Ended on December 31, Year 2

Income Statement for the Year Ended on Amount ($)


December 31, Year 2

Sales 150,000

Cost of goods sold 70,000

Depreciation expense 18,000

Interest expense 2,000


Gain on machine disposal (4,000)

Income from operations 56,000

Income tax (16,000)

Net income 40,000

Additional Information:

1. In Year 2, $20,000 of the outstanding loan was paid in cash.

2. Interest expense was paid in cash.

3. Common stocks were issued for cash.

4. Dividends of $10,000 were declared and paid in cash.

5. A machine with a cost of $60,000 was purchased for cash.

6. A machine was sold for $18,000 in cash. The cost of the machine is $20,000 and its book
value is $14,000.

Prepare the statement of cash flows of the company for Year 2 under the indirect method.

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