In: Accounting
Create the statement of cash-flow with indirect method
Interpret the result of the statement of cash flow with percentage
Instruction:
[1] Please use the balance sheet as follows to classify each activity (operating, investing, and financing) from the column of different.
[2] please create a new statement of cash-flow from your classification on balance sheet.
[3] The statement of cash flow will be provided to measure the company’s cash flow situation. Also, you need to interpret the result of your measurement.
Balance sheet |
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SILVERT CORPORATION |
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Balance Sheet |
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December 31 |
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Different |
Operating |
Investing |
Financing |
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2012 |
2011 |
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ASSET |
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Cash |
$ 28,000 |
$ 20,000 |
$8,000 |
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Receivable (net) |
70,000 |
62,000 |
$8,000 |
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Other current assets |
90,000 |
73,000 |
$17,000 |
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Long-term investment |
62,000 |
60,000 |
$2,000 |
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Plant and equipment (net) |
510,000 |
470,000 |
$40,000 |
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Total Assets |
$ 760,000 |
$ 685,000 |
$75,000 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities |
$ 75,000 |
$ 70,000 |
$5,000 |
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Long-term debt |
80,000 |
90,000 |
($10,000) |
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Common stock |
330,000 |
300,000 |
$30,000 |
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Retained earnings |
275,000 |
225,000 |
$50,000 |
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Total liabilities and stockholders’ equity |
760,000 |
685,000 |
$75,000 |
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]2] Create the statement of cash-flow by using the indirect method. Company has net income as starting point of $80,000.
STATEMENT OF CASH FLOW
Operating Activities |
|
Net Income |
$ 80,000 |
Cashflow from Operations |
|
Investing Activities |
|
Cashflow from Investing |
|
Financing Activities |
|
Cashflow from Financing |
Answer 1. | ||||||
Silvert Corporation | ||||||
Balance Sheet | ||||||
December 31 | ||||||
Difference | Operating | Investing | Financing | |||
2012 | 2011 | |||||
Asset | ||||||
Cash | 28,000.00 | 20,000.00 | 8,000.00 | |||
Receivable (Net) | 70,000.00 | 62,000.00 | 8,000.00 | 8,000.00 | ||
Other Current Assets | 90,000.00 | 73,000.00 | 17,000.00 | 17,000.00 | ||
Long Term Investment | 62,000.00 | 60,000.00 | 2,000.00 | 2,000.00 | ||
Plant & Equipment (Net) | 510,000.00 | 470,000.00 | 40,000.00 | 40,000.00 | ||
Total Assets | 760,000.00 | 685,000.00 | ||||
Liabilities & Stockholders' Equity | ||||||
Current Liabilities | 75,000.00 | 70,000.00 | 5,000.00 | 5,000.00 | ||
Long Term Debt | 80,000.00 | 90,000.00 | (10,000.00) | (10,000.00) | ||
Common Stock | 330,000.00 | 300,000.00 | 30,000.00 | 30,000.00 | ||
Retained Earnings | 275,000.00 | 225,000.00 | 50,000.00 | |||
Total Liabilities & Stockholders' Equity | 760,000.00 | 685,000.00 | ||||
Answer 2. | ||||||
Silvert Corporation | ||||||
Statement of Cash Flows (Indirect Method) | ||||||
For the Year ended Dec 31, 2012 | ||||||
Cash Flow from opearating activities: | ||||||
Net Income | 80,000 | |||||
Add/(Less) non cash effects on operating activities | ||||||
Increase in Accounts Receivables | (8,000) | |||||
Increase in Other Current Assets | (17,000) | |||||
Increase in Current Liabilities | 5,000 | (20,000) | ||||
Net Cash provided by operating activities | 60,000 | |||||
Cash flow from Investing Activities | ||||||
Purchase of Long Term Investment | (2,000) | |||||
Purchase of Plant & Euipment (net) | (40,000) | |||||
Net Cash used by Investing activities | (42,000) | |||||
Cash Flow from Financing Activities | ||||||
Paymnet of Long Term debt | (10,000) | |||||
Issue of Common Stock | 30,000 | |||||
Cash dividend paid | (30,000) | |||||
Net Cash used by Financing activities | (10,000) | |||||
Net Increase / (Decrease) in Cash | 8,000 | |||||
Cash balance at the beginning - Dec 31, 2011 | 20,000 | |||||
Cash balance at the end - Dec 31, 2012 | 28,000 | |||||
Calculation of Dividend Paid: | ||||||
Retained Earnings - Dec 31, 2011 | 225,000.00 | |||||
Add: Net Income | 80,000.00 | |||||
Sub-total | 305,000.00 | |||||
Retained Earnings - Dec 31, 2012 | 275,000.00 | |||||
Dividend Paid | 30,000.00 | |||||
Answer 3. | ||||||
The Company Cash Condition is good. The Cash flow from Opeearting Activities are more than Cash used in Investing Activities. |