Question

Booster Company is preparing its financial statements for the year ended June 30, 2018. The financial statements are complete except for the statement of cash flows. You have been asked to prepare a statement of cash flows for the year ended June 30, 2017.

Download the Excel spreadsheet Booster Company A1.

Required:

1. Prepare a spreadsheet to support a statement of cash flows for the year ended June 30, 2018.
2. In the Excel Worksheet column named ‘Worksheet Entries’, show under Debit and Credit, the amounts that would be used in preparation of the statement of cash flows.
3. Prepare the Booster Company’s statement of cash flows for the year ended June 30, 2018. Prepare the statement of cash flows using the indirect method. Note: For full credit, you must prepare the statement of cash flow in good form with all necessary disclosures, including disclosures about non-cash financing and investing activities.

Really need help in understanding the debits and credits part of the worksheet and how that helps us find net income somehow and prepared the SCF. Thanks!

You are the accountant for Booster Construction Company, a large construction company in Colorado. You have been presented with the following financial information for Booster and asked to prepare the Statement of Cash Flows for the year ended June 30, 2018. You will complete all work for the project in this excel file, which includes the following tabs: 1. Facts - Information taken from Booster's accounting records and additional information regarding the cash flows as of June 30, 2018. 2. Worksheet - Worksheet template (also see Example in chap 21 of textbook). 3. Cash Flows - Statement of Cash Flows template (also see Example in chap 21 of textbook). Account Balances June 30, 2017 June 30, 2018 Debits $ Cash Accounts Receivable Marketable Securities (at cost) Allowance for Change in Value Construction in Process Prepaid Expenses Investments (long-term) Leased Equipment Building Deferred tax asset 361,700 100,000 11,700 1,500 168,750 45,000 880,550 125,000 13,000 1,800 405,000 10,000 13,500 20,000 30,000 5,375 10,500 Land 2,200 10,500 1,305 1,482,855 Discount on Bonds Payable Totals 734,525

Answer 1

Cash Flow Worksheet Balances 6/30/2016 6/30/2017 Worksheet Entries Change Increase (Dec DR Account Titles Debits Cash Noncash Accounts: Accounts Receivable $ 361,700.00 $ 880,550.00 $518,850.00 $518,850.00 $ | $ 100,000.00 $ 125,000.00 $ 25,000.00 $ 30,000.00 $ 5,000.00 Marketable Securities (at cost) $ 11,700.00 $ 13,000.00 $ 1,300.00 $ 1,300.00 $ $ $ 1,500.00 168,750.00 45,000.00 $ 300.00 $ 236,250.00 $ 35,000.00 $ 2,000.00 Allowance for Change in Value Construction in Process Prepaid Expenses Investments (long-term) Leased Equipment Building Deferred tax asset Land Discount on Bonds Payable $ $ 1,800.00 $405,000.00 $ 10,000.00 $ 13,500.00 $ 20,000.00 $ - $ 2,200.00 $ 10,500.00 $ 1,305.00 $ 300.00 $236,250.00 $ (35,000.00) $ 13,500.00 $ 20,000.00 $ (30,000.00) $ (3,175.00) $ - $ 1,305.00 $ 15,500.00 $ 20,000.00 $ $ $ 30,000.00 5,375.00 10,500.00 $ 30,000.00 $ 3,175.00 $ 1,350.00 $ 45.00 Credits $ Allowance for doubtful accounts Accounts Payable Deferred tax liability Income Taxes Payable Note Payable (long-term) $ $ $ 6,000.00 $ 4,500.00 $ (1,500.00) $ 1,500.00 87,500.00 $ 210,000.00 $ 122,500.00 1,000.00 $ 3,300.00 $ 2,300.00 3,500.00 $ 9,000.00 $ 5,500.00 3,500.00 $ - $ (3,500.00) $ 3,500.00 $ 122,500.00 $ 2,300.00 $ 5,500.00 $ 2,500.00 $ $ (2,500.00) $ 2,500.00 Accumulated Depreciation on Building Accumulated Depreciation on Leased Asset Lease obligation $ 3,000.00 $ 18,000.00 $ 3,000.00 $ 18,000.00 $ 3,000.00 $ 18,000.00 Interest payable on lease obligation Interest payable (Bonds) Bonds payable $ 1,800.00 $ 1,800.00 $ 45,000.00 $ 1,800.00 $ 1,800.00 $ 45,000.00 $ 1,800.00 $ 1,800.00 $ 45,000.00 Billings on contruction in process Pension liability $ $ 150,000.00 150,000.00 $ 325,000.00 $400,000.00 $175,000.00 $ 250,000.00 $175,000.00 $350,000.00 $ 100,000.00 9,000.00 $ $ $ 9,000.00 14,000.00 8,700.00 $ $ 9,000.00) $ $ 24,500.00 $ 10,500.00 $ 13,700.00 $ 5,000.00 $ 10,500.00 $ 5,000.00 Convertible preferred stock, $100 par Common Stock, $10 par Additional Paid-in Capital Unrealized Increase in Value of Marketable Securities Retained Earnings $ $ 1,500.00 $ 1,800.00 $ 300.00 297,325.00 $421,455.00 $124,130.00 $ 300.00 $ 124,780.00 $ 650.00 DR 124,780.00 3,000.00 1,500.00 45.00 3,500.00 $ $ $ 4,000.00 1,000.00 6,000.00 Cash flow from operating activities Net Income $ Depreciation Expenses $ Loss on sale of building $ Amortisation Discount on bond $ Bad Debt(net of bad debts write back) $ Gain on conversion of preferred sotck Gain on repayment of Note Payable Share income from subsidiary Dividend Received from subsidiary $ Provison for Pension $ Increase in Accounts receivable Increase in Inventory net of billing in progress Decrease in prepaid expenses $ Increase in Income Tax payable (including deferred tax) $ Increase in Accounts payable $ Increase in interest payable $ Dcrease in pension Liability 2,000.00 350,000.00 $ 30,000.00 $ 61,250.00 35,000.00 10,975.00 122,500.00 3,600.00 $ 100,000.00 Cash flow from investing activities Marketable Security Investment Long Term Lease Equipment net of Leaase Obligation Sale of building $ $ $ 1,300.00 9,500.00 2,000.00 $ 26,000.00 Cash flow from Financing activities activities Common Stock issued including additional capital $ Bond Payable $ Dividend Paid 8,000.00 43,650.00 $ 650.00 increase in cash Total $ $518,850.00 $734,550.00 734,550.00 Cash Flow Statement Operating Activities Net Income $ 124,780.00 Adjustment for Non cash item/item recorded separately Depreciation Expenses $ 3,000.00 Loss on sale of building $ 1,500.00 Amortisation Discount on bond $ 45.00 Bad Debt(net of bad debts write back) $ 3,500.00 Gain on conversion of preferred sotck $ (4,000.00) Gain on repayment of Note Payable $ (1,000.00) Share income from subsidiary $ 6,000.00) Dividend Received from subsidiary $ 2,000.00 Provison for Pension $ 350,000.00 adjustment for change in working capital Increase in Accounts receivable $ (30,000.00) Increase in Inventory net of billing in progress $ (61,250.00) Decrease in prepaid expenses $ 35,000.00 Increase in Income Tax payable (including deferred tax) $ 10,975.00 Increase in Accounts payable $ 122,500.00 Increase in interest payable $ 3,600.00 Dcrease in pension Liability $ (100,000.00) Net cash flow from Operating Activities $ 454,650.00 Investing Activities Marketable Security $ Investment Long Term $ Lease Equipment net of Lease Obligation $ Sale of building $ Net cash flow from investing activities $ (1,300.00) (9,500.00) 2,000.00) 26,000.00 13,200.00 Financing activities Common Stock issued including additional $ Bond Payable $ Dividend Paid $ Net cash flow from Financing activities $ 8,000.00 43,650.00 (650.00) 51,000.00 Net change in cash opening cash Closing cash $ $ $ 518,850.00 361,700.00 880,550.00