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.

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 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

  1. 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.
  2. Determine which category of the statement of cash flow is most important? Why?
  3. Prepare a complete statement of cash flows for 2012 using the indirect method with the information provided.
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Cash Flow Statements

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