The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been shared at a meeting of the company’s board of directors. The members of the board of directors were desirous of knowing the reason or reasons why the cash balance different from the net income. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the directors. Financial info to be used are attached.Using the attached Comparative Balance sheet and Income statement:Reconstruct the company’s comparative balance sheet for 2020/2021, compute and show the missing figures to include the appropriate sign as a positive or negative figure.Prepare a complete statement of cash flows for 2021 using the indirect method. Auga Company LtdIncome StatementYear Ended December 31,2021Revenues and gains:Sales revenue2,100,00085,000Gain on sale of EquipmentTotal revenues and gainsExpensesCost of goods soldDepreciation expenseOther operating expenseTotal expenses2,185,000900,000150,000350,0001,400,000785,000210,000575,000Income before income taxesIncome tax expenseNet IncomeNotesAcquisition of Equipment during 2021540,000Sale proceeds from sale of Equipment255,000Receipt for issuance of notes payable27,000Payment for note payable150,000Dividend paid295,000Book value of equipment sold170,000 The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been shared at a meeting ofthe company's board of directors. The members of the board of directors were desirous of knowing the reason or reasonswhy the cash balance different from the net income. The company uses the indirect method to prepare the statement ofcash flows and it is expected that this should be able to provide the needed clarity required by the directors. Financial infoto be used:Auga Company LtdComparative Balance SheetDecember 31, 2021 and 202020212020 Increase/(Decrease)Assets70,000325,000280,000Cash110,000300,000350,00035,000215,0001,200,0002,210,000Accounts Receivable?SuppliesPrepaid expensesIntangible assetsEquipment, net?28,000215,000980,000Total Assets1,898,000LiabilitiesAccounts payable250,000210,00078,000602,000140,000Accrued liabilities215,000?Income tax payableLong-term notes payableStockholders' Equity98,500725,000Common StockRetained earnings410,000730,000330,000450,000?Treasury stockTotal liabilities and stockholders' equity(70,000)2,210,000(60,500)1,898,000?

Statement of Cash Flow - Cash flow statement determines the total cash inflows and outflows occurred…

Answered: Auga Company Ltd Income Statement Year…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

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The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been shared at a meeting of the company’s board of directors. The members of the board of directors were desirous of knowing the reason or reasons why the cash balance different from the net income. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the directors. Financial info to be used are attached.

Using the attached Comparative Balance sheet and Income statement:

Reconstruct the company’s comparative balance sheet for 2020/2021, compute and show the missing figures to include the appropriate sign as a positive or negative figure.
Prepare a complete statement of cash flows for 2021 using the indirect method.

Auga Company Ltd
Income Statement
Year Ended December 31,2021
Revenues and gains:
Sales revenue
2,100,000
85,000
Gain on sale of Equipment
Total revenues and gains
Expenses
Cost of goods sold
Depreciation expense
Other operating expense
Total expenses
2,185,000
900,000
150,000
350,000
1,400,000
785,000
210,000
575,000
Income before income taxes
Income tax expense
Net Income
Notes
Acquisition of Equipment during 2021
540,000
Sale proceeds from sale of Equipment
255,000
Receipt for issuance of notes payable
27,000
Payment for note payable
150,000
Dividend paid
295,000
Book value of equipment sold
170,000

The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been shared at a meeting of
the company's board of directors. The members of the board of directors were desirous of knowing the reason or reasons
why the cash balance different from the net income. The company uses the indirect method to prepare the statement of
cash flows and it is expected that this should be able to provide the needed clarity required by the directors. Financial info
to be used:
Auga Company Ltd
Comparative Balance Sheet
December 31, 2021 and 2020
2021
2020 Increase/(Decrease)
Assets
70,000
325,000
280,000
Cash
110,000
300,000
350,000
35,000
215,000
1,200,000
2,210,000
Accounts Receivable
?
Supplies
Prepaid expenses
Intangible assets
Equipment, net
?
28,000
215,000
980,000
Total Assets
1,898,000
Liabilities
Accounts payable
250,000
210,000
78,000
602,000
140,000
Accrued liabilities
215,000
?
Income tax payable
Long-term notes payable
Stockholders' Equity
98,500
725,000
Common Stock
Retained earnings
410,000
730,000
330,000
450,000
?
Treasury stock
Total liabilities and stockholders' equity
(70,000)
2,210,000
(60,500)
1,898,000
?

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