Question

Comparative balance sheets for Byron Manufacturing as of December 31, 20Y8 and 20Y7 are shown. Complete the Changes column to determine net cash flows during the year.

Byron Manufacturing Balance Sheets As of December 31, 2048 and 2017 Assets 2048 2017 Current assets: Cash 5,360 9,240 Accounts receivable 10,690 9,070 Inventory 19,890 18,510 Total current assets 35,940 36,820 Property, plant, and equipment Building 493,000 493,000 Equipment 278,000 270,400 771,000 763,400 Accumulated depreciation (147,200) (120,800) Net property, plant, and equipment 623,800 642,600 Total assets 659,740 679,420 Liabilities and Equity Current liabilities:

Additional information needed to prepare the statement of cash flows using the indirect method:

1. Net income was $2,790
2. Byron paid $20,850 in cash dividends
3. Byron issued $54,610 in bonds payable for cash
4. Byron retired $99,610 in bonds with cash
5. No fixed assets were sold or disposed of during the period

Now prepare the statement of cash flows for Byron Manufacturing using the indirect method. Select Increase or Decrease and enter the amounts.

Now you can prepare the Statement of Cash Flows using the indirect method. Fill in the Statement based on the spreadsheet. Select Increase or Decrease and enter the amounts.

The major causes of differences between Byron Manufacturing’s net income and net cash from operating activities are the noncash_________ and the ______ (showing that the company paid for fewer expenses than were expensed on the income statement).

Answer 1

Byron Manufacturing
Spreadsheet to Prepare the Statement of Cash Flows
For the Year Ended December 31,2018
Balance Sheet Accounts	Beginning Balance		Increase/ Decrease			Ending Balance
			Debit	Credit
Cash	$9,240		$0	$3,880	(m)	$5,360
Accounts receivables	$9,070	(h)	$1,620	$0		$10,690
Inventory	$18,510	(i)	$1,380	$0		$19,890
Building	$493,000		$0	$0		$493,000
Equipment	$270,400	(b)	$7,600	$0		$278,000
Accumulated Depreciation	$120,800		$0	$26,400	(c)	$147,200
Accounts Payable	$36,060		$0	$19,410	(j)	$55,470
Salaries Payable	$11,790	(k)	$2,400	$0		$9,390
Income Tax Payable	$9,860	(l)	$8,630	$0		$1,230
Bonds Payable	$395,000	(e)	$99,610	$54,610	(d)	$350,000
Common Stock	$146,000		$0	$35,000	(f)	$181,000
Retained Earnings	$80,710	(g)	$20,850	$2,790	(a)	$62,650
			$142,090	$142,090
			Increase/ Decrease
Statement of cash Flows			Debit	Credit
Cash from operating Activities
Net Income		(a)	$2,790
Adjustments to reconcile net Income
to net Cash flow from Operating Activities
Depreciation Expenses		(c )	$26,400
Increase in Accounts Receivables				$1,620	(h)
Increase in Inventory				$1,380	(i)
Increase in Accounts Payables		(j)	$19,410
Decrease in Salary Payable				$2,400	(k)
Decrease in Income Taxes payables				$8,630	(l)
Cash flows from Investing Activities
Purchase of Equipment				$7,600	(b)
Cash Flows from Financing Activities
Issued Bonds Payable		(d)	$54,610
Retired Bonds Payable				$99,610	(e)
Issued Common Stock		(f)	$35,000
Paid Dividend				$20,850	(g)
Net Increase (Decrease) in cash		(m)	$3,880
			$142,090.00	$142,090.00
Bonds Payables
Opening Balance				$395,000
Issued during the Year				$54,610
Retired During the Year			$99,610
Closing Balance			$350,000
Retained Earnings
Opening Balance				$80,710
Net Income				$2,790
Dividend			$20,850
Closing Balance			$62,650
Cash Flow using Indirect Method
Byron Manufacturing
Statement of Cash Flows
For the Year Ended December 31,2018
Cash flow from Operating Activitie
Net Income			$2,790
Adjustments to reconcile net income to
net cash flow from operating activities
Depreciation Expense	$26,400
Increase in Accounts receivable	($1,620)
Increase in Inventory	($1,380)
Increase in Accounts Payable	$19,410
Decrease in Salary Payable	($2,400)
Decrease in Income tax Payable	($8,630)		$31,780
Cash Provided by Operating Activities			$34,570
Cash Flow from Investing Activities
Purchase of Equipment	($7,600)		($7,600)
Net Cash Used for Investing Activities			$26,970
Cash flow from Financing Activities
Proceeds fro issuance of bonds payable	$54,610
Retired bonds payable	($99,610)
Issued Common Stock	$35,000
Payments of dividends	($20,850)		($30,850)
Net Cash Used for Financing Activities			($3,880)
Net Increase (Decrease) in cash
Cash 1/1/2018			$9,240
Cash 12/31/2018			$5,360
The major causes of differences between Byron Manufacturing’s net income and
net cash from operating activities are the noncash Expenses of Depreciation Amounted $26400/-
and the addition in Accounts Payable Amounted $19410/- (showing that the company paid for
fewer expenses than were expensed on the income statement).