Question

In: Accounting

Cash Accounts Receivable Allowance BD Inventory PPD Rent PPD Insurance Supplies Securities Equiptment AD Equipment Del....

Cash

Accounts Receivable

Allowance BD

Inventory

PPD Rent

PPD Insurance

Supplies

Securities

Equiptment

AD Equipment

Del. Truck

A/D Delivery Truck

Land

Accounts Payable

Salaries Payable

Payroll Taxes Payable

Interest Payable

Dividends Payable

Income Tax Payable

Note Payable

Bond Payable

Common Stock

APIC

Unearned Compensation

Treasury Stock

Dividends

Income Summary

Sales

Sales R & Allow

Sales Disc

COGS

Compensation Exp

Salaries Exp

Rent Exp

Bad Dept Exp

Payroll Tax Exp

Advertisting

Insurance Exp

Supplies Exp

Depreciation Exp

Utilities Exp

Interest Exp

Income Tax Exp

Realized G/L

Unrealized G/L

Misc Exp

Bonds Discount Amortised

-------------

I didn’t include the account amounts but given these accounts how would you set up the cash flows statement?

Solutions

Expert Solution

Statement of Cash flows for the period ending xx/xx/xxxx (Indirect Method)

Operating Activities

Net Income (a)

Adjustments to reconcile Net Income to Net Cash provided by operations:

Accounts receivable

Allowance BD

Inventory

PPD Rent

PPD Insurance

Supplies

Securities

Accounts Payable

Salaries Payable

Payroll taxes payable

Interest payable

Income tax payable

Depreciation

Amortization

Realized gains

Bonds Discount amortized

Total Adjustments to reconcile Net Income to Net Cash provided by operations (b):

Net cash provided by operating activities (a+b)

INVESTING ACTIVITIES:

Equipment

Delivery Truck

Land

Net cash provided by (used in) investing activities

FINANCING ACTIVITIES:

Note Payable

Bond Payable

Common Stock

APIC

Dividends

Unearned Compensation

Treasury Stock

Net cash provided by Financing Activities

Net cash increase (Decrease) for the period

Cash at beginning of the period

Cash at end of the period

Notes:

The above is the format for Statement of cash flows prepared under Indirect method

Dividends payable - are not included as they are just a reduction from the retained earnings, This is a non cash transaction which shifts an amount from equity section to current liabilities

Unrealized gains/ losses are not shown on the statement of cash flows, as they are a part of Other comprehensive Income, shown under Owners equity section on balance sheet. There is no impact on cash flows

In operating activities, the adjustments to reconcile Net Income to Net Cash provided by operations is shown based on the following:

Add: Decrease in Current assets and Increase in current liabilities

Less: Increase in current assets and decrease in current liabilities

ekkarill92 answered 1 year ago

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