Question

AC313

Preparing a Statement of Cash Flows Using the Direct Method using Excel's SUM Function and Multi- tab References Innovation Electronics, Inc. has provided you with the year end Income Statement Balance Sheet. The Controller has asked you to prepare the Statement of Cash Flows for the same year ended December 31, Use the information included in the Excel Simulation and the Excel functions described below to complete the task. Multi-Tab Cell Reference: Allows you to refer to data from another cell in a separate tab in the worksheet. When using the multi-tab cell reference, type the equal sign first, then click on the other tab and then click on the cell you want to reference. The syntax of a multi-tab cell reference looks different than a normal cell reference, since it includes the tab name surrounded by apostrophes and also an exclamation point before the cell location. From the Excel Simulation below, if in a blank cell on the Sheet1 tab "Income Statement B15" was entered, the formula would output the result from cell 815 in the Balance Sheet tab, or 16,000 in this example. Basic Math functions: Allows you to use the basic math symbols to perform mathematical functions. You can use the following keys: +(plus sign to add), - (minus sign to subtract). (asterisk sign to multiply). and/(forward slash to divide). From the Excel Simulation below on the Balance Sheet tab, if in a blank cell "-C15+C16" was entered, the formula would add the values from those cells and output the result, or 375,000 in this example. If using the other math symbols the result would output an appropriate answer for its function. .SUM function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges to utilize this function. From the Excel Simulation below on the Balance Sheet tab, if in a blank cell "-SUM(C10,C11,C12)" was entered, the formula would output the result of adding those three separate cells, or 236,740 in this example. Similarly, if in a blank cell "-SUM(C10:C12)" was entered, the formula would output the same result of adding those cells, except they are expressed as a range in the formula, and the result would be 236,740 in this example. Prepare a statement of cash flows using the indirect method- Excel FILE VIEW НОМЕ INSERT PAGE LAYOUT FORMULAS DATA REVIEW Sign In 1AA Calibri %

required:

Answer 1

The cash flow statement will be prepared in the following manner:

	Amount in $
Cash Flows from Operating Activities:
Net Income	1,77,500
Depreciation expense	16,000
Gain on sale of land	-6,500
Changes in current assets and current liabilities
Accounts Receivable	14,300
Inventory	-6,500
Prepaid insurance	1,580
Accounts payable	-54,500
Income taxes payable	-2,300
Interest payable	1,100
Cash Flows from Operating Activities:	1,40,680
Cash Flows from Investing Activities:
Purchase Investments	-91,000
Sale of land	53,000
Cash Flows from Investing Activities:	-38,000
Cash Flows from Financing Activities:
Issue Common Stock	43,000
Issue long term note	13,000
Cash Flows from Financing Activities:	56,000
Net Increase in Cash	1,58,680
Add: Beginning Cash balance	25,740
Ending Cash Balance	1,84,420

Notes

The workings for the preparation of CFS are given below:

Workings 1,77,500 given 16,000 Igiven -6,500 given -Cash Flows from Operating Activities: Net Income Depreciation expense Gain on sale of land Changes in current assets and current liabilities Accounts Receivable Inventory Prepaid insurance Accounts payable Income taxes payable - Interest payable Cash Flows from Operating Activities: 14,300 83000-68700 -6,500 128000-134500 1,580 4560-2980 -54,500 26500-81000 -2,300 30200-32500 1,100 3400-2300 Cash Flows from Investing Activities: Purchase Investments Sale of land Cash Flows from Investing Activities: -91,000 120000-211000 53,000 255000-208500-6500 -38,000 Cash Flows from Financing Activities: Issue Common Stock Issue lone term note Cash Flows from Financing Activities: 43,000 273000-230000 13,000 255000-242000 56,000 Net Increase in Cash Add: Beginning Cash balance Ending Cash Balance 1,58,680 CFO+CFI+CFF 25,740 1,84,420 given