Unit 9 - Statement of Cash Flow
As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records:
Principal payments on non-current debt $ 50,000
Collections on accounts receivable 287,500
Increase in accounts payable 24,300
Acquisition of equipment by issuing non-current note payable 70,000
Depreciation expense 71,300
Collection of loan principal 58,000
Proceeds from sale of investments, not including $5,100 gain 49,100
Increase in accounts receivable 7,200
Cash payments to purchase capital assets 62,000
Decrease in accrued liabilities 30,600
Payment of cash dividends 46,500
Income tax expense and payments 39,300
Proceeds from sale of capital assets, not including $7,400 loss 22,600
Net income 147,100
Cash sales 217,400
Proceeds from issuance of common shares 300,000
Increase in inventory 41,700
Loan to another company 60,000
Bonds payable converted into common shares 130,000
Payments to suppliers 283,100
Decrease in prepaid expenses 12,800
Cash balance: December 31, 2016 62,500
Cash balance: December 31, 2017 452,000
Prepare the cash flow statement for the year ended December 31, 2017, using the indirect method.
Your best friend just lost his job because the company he was working for went bankrupt. He was complaining to you that even though the company had been profitable for three years in a row, it still went out of business. He asks you how this can happen.
Explain the most likely reason for the company declaring bankruptcy. Could your best friend have seen it coming? How?
The reason for bankruptcy is the cash flows of the firm. The net income and expense is reported based on the accrual concept in Income statement and hence it ignores the cash flows of the firm. A Higher profitable firm need not be solvent if its cash flows are not well managed. For example if it has higher inventory and receivables and lower payables the cash flows can be lower than the net profit reported. The cash flows of the firm play a big role to remain solvent and net profit is not the indicator of solvency for the firm.
Yes, my best friend could have seen it coming by reading the cash flow statement which is part of the financial statements issued by the firm. Cash flow statement gives details of operating, investing and financing activities of the firm during the year. They show the net movement in the cash during the year and help in analysing and taking informed decisions.
Unit 9 - Statement of Cash Flow As the accountant for Awesome Foods Incorporated, you are...
As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records: Principal payments on non-current debt $ 50,000 Collections on accounts receivable 287,500 Increase in accounts payable 25,300 Acquisition of equipment by issuing non-current note payable 70,000 Depreciation expense 71,500 Collection of loan principal 58,000 Proceeds from sale of investments, not including $5,100 gain ...
As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records Principal payments on non-current debt$ 50,000 Collections on accounts receivable287,500 Increase in accounts payable24,300 Acquisition of equipment by issuing non-current note payable70,000 Depreciation expense71,300 Collection of loan principal58,000 Proceeds from sale of investments, not including $5,100 gain49,100 Increase in accounts receivable7,200 Cash payments...
As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records: Principal payments on non-current debt$ 50,000 Collections on accounts receivable287,500 Increase in accounts payable25,300 Acquisition of equipment by issuing non-current note payable70,000 Depreciation expense71,500 Collection of loan principal58,000 Proceeds from sale of investments, not including $5,100 gain49,100 Increase in accounts receivable7,200 Cash payments...
Question 2 (30 marks) Unit 9 - Statement of Cash Flow As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records: Principal payments on non-current debt$ 50,000 Collections on accounts receivable287,500 Increase in accounts payable24,300 Acquisition of equipment by issuing non-current note payable70,000 Depreciation expense71,300 Collection of loan principal58,000 Proceeds from sale of...
Question 2 (30 marks) Unit 9 - Statement of Cash Flow As the accountant for Awesome Foods Incorporated, you are responsible for preparing the cash flow statement. You have decided to prepare the statement using the indirect method and have gathered the following data from the accounting records: Principal payments on non-current debt$ 50,000 Collections on accounts receivable287,500 Increase in accounts payable24,300 Acquisition of equipment by issuing non-current note payable70,000 Depreciation expense71,300 Collection of loan principa158,000 Proceeds from sale of...
Principal payments on non-current debis 50,000 Collections an accounts receivable287,500 Increase in accounts payable24,300 Acquisition of equipment by issuing non-current note payable70,000 Depreciation expense71,300 Collection of loan principal58,000 Proceeds from sale of investments, not including $5,100 gain49,100 Increase in accounts receivable7,200 Cash payments to purchase capital assets62,000 Decrease in accrued liabilities 30,600 Payment of cash dividends 46,500 Income tax expense and payments 19,300 Proceeds from sale of capital assets, not including $7,400 loss 22,600 Net income147,100 Cash sales217,400 Proceeds from...
Cash Flow Statement The accountant of Organic Foods, Inc, assembled the following data entity's statement of cash flows for the period ended December 31, 201 Investment by the owner Collections from customers Advance payments received from customers- Proceeds from sale of an old computer unit - Loan proceeds from bank P100,000 150,000 40,000 5,000 Total cash receipts 370,00 Payments were made for the following items: O Purchase of an office conditioning unit O Salaries P 30,000 135,000 20,000 10,000 15,000...
Prepare an INDIRECT statement of cash flow! Do not prepare a direct method statement. SHOW EXCEL FORMULAS! Net income $100,000 Cash December 31, 2018 $500,000 Cash December 31 2019 ??????? Depreciation Expense $1,000 Increase in inventory $2,000 Decrease in accounts payable $3,000 Increase in Prepaid insurance $4,000 Purchased stock $5,000 Purchased land $6,000 Paid mortgage $7,000 Paid car loan $2,200 Increase in wages payable $3,300
Curwen Inc. reported net cash flow from operating activities of $201,300 on its statement of cash flows for the year ended December 31. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $4,600 Decrease in inventories 11,500 Depreciation 17,700 Gain on sale of investments 8,000 Increase in accounts payable 3,200 Increase in prepaid expenses 1,900 Increase in accounts receivable 8,700 a....
To earn the extra credits, you MUST complete this statement of cash flow and PRINT it out. I will collect it on Dec. 3rd class. I ONLY accept HARD COPY! 1. Suppose the income statement for Lily Company reports 595 of net income, after deducting depreciation of 535. The company bought equipment costing S60 and obtained a long-term bank loan for S70. The comparative balance sheet below shows a few current assets and current liabilities accounts. Previous Year $35 Cash...