Below shows the 2012 comparative balance sheet and 2012 income statement for Sammy’s Limited which was distributed to attendees during a board meeting. The attendees would like to know the reason or reasons why the cash balance is different from the net income. Sammy’s Limited uses the indirect method to prepare the statement of cash flows. Therefore, it is expected that this will provide the needed clarity required by the directors. Acquisition of plant asset during 2012 600,900 Sale proceed from sale of plant asset 356,000 Receipt for issuance of notes payable 384,900 Payment for note payable 450,000 Dividend paid 148,500 Book value of equipment sold 240,500 Questions Reconstruct the company’s comparative balance sheet for 2011/2012 and compute and show the missing figures to include the appropriate sign as a positive or negative figure. Determine which category of the statement of cash flow is most important? Why? Prepare a complete statement of cash flows for 2012 using the indirect method with the information provided.
Below shows the 2012 comparative balance sheet and 2012 income statement for Sammy’s Limited which was distributed to attendees during a board meeting. The attendees would like to know the reason or reasons why the cash balance is different from the net income. Sammy’s Limited uses the indirect method to prepare the statement of cash flows. Therefore, it is expected that this will provide the needed clarity required by the directors. Acquisition of plant asset during 2012 600,900 Sale proceed from sale of plant asset 356,000 Receipt for issuance of notes payable 384,900 Payment for note payable 450,000 Dividend paid 148,500 Book value of equipment sold 240,500 Questions Reconstruct the company’s comparative balance sheet for 2011/2012 and compute and show the missing figures to include the appropriate sign as a positive or negative figure. Determine which category of the statement of cash flow is most important? Why? Prepare a complete statement of cash flows for 2012 using the indirect method with the information provided.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Below shows the 2012 comparative balance sheet and 2012 income statement for Sammy’s Limited which was distributed to attendees during a board meeting. The attendees would like to know the reason or reasons why the cash balance is different from the net income. Sammy’s Limited uses the indirect method to prepare the statement of
Acquisition of plant asset during 2012 600,900
Sale proceed from sale of plant asset 356,000
Receipt for issuance of notes payable 384,900
Payment for note payable 450,000
Dividend paid 148,500
Book value of equipment sold 240,500
Questions
- Reconstruct the company’s comparative balance sheet for 2011/2012 and compute and show the missing figures to include the appropriate sign as a positive or negative figure.
- Determine which category of the statement of cash flow is most important? Why?
- Prepare a complete statement of cash flows for 2012 using the indirect method with the information provided.
Transcribed Image Text:Sammy's Limited
Comparative Balance Sheet
December 31, 2012 and 2011
2012
2011 Increase/(Decrease)
Assets
Cash
238,000
303,200
358,300
35,350
205,000
1,105,000
2,244,850
215,200
259,300
348,200
43,100
205,000
910,000
1,980,800
?
Accounts Receivable
?
Inventories
?
Prepaid expenses
Intangible assets
Plant assets, net
?
?
?
Total Assets
Liabilities
Accounts payable
254,300
415,300
115,000
845,400
240,000
410,000
135,400
910,500
?
Accrued liabilities
?
Income tax payable
Long-term notes payable
Stockholders' Equity
?
?
Common Stock
295,500
345,600
275,300
295,400
?
Retained earnings
?
Treasury stock
Total liabilities and stockholders' equity
(26,250)
2,244,850
(285,800)
1,980,800
Transcribed Image Text:Sammy's Limited
Income Statement
Year Ended December 31,2012
Revenues and gains:
Sales revenue
2,224,000
115,500
Gain on sale of plant assets
Total revenues and gains
Expenses
Cost of goods sold
Depreciation expense
Other operating expense
Total expenses
2,339,500
1,305,000
165,400
405,400
1,875,800
463,700
265,000
198,700
Income before income taxes
Income tax expense
Net Income
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