The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been distributed 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.The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your first name initial. Having identified the information you are next required to address the requirements outlined below. Auga Company Ltd.Comparative Balance SheetDecember 31, 2020 and 2021 20212020Increase/(Decrease) Assets Cash 238,000 215,200 ? Accounts Receivable 303,200 259,300 ? Inventories 358,300 348,200 ? Prepaid expenses 35,350 43,100 ? Intangible assets 205,000 205,000 ? Plant assets, net 1,105,000 910,000 ? Total Assets 2,244,850 1,980,800 Liabilities Accounts payable 254,300 240,000 ? Accrued liabilities 415,300 410,000 ? Income tax payable 115,000 135,400 ? Long-term notes payable 845,400 910,500 ? Stockholders' Equity Common Stock 295,500 275,300 ? Retained earnings 345,600 295,400 ? Treasury stock (26,250) (285,800) ? Total liabilities and stockholders' equity 2,244,850 1,980,800 Auga Company Ltd.Income StatementYear Ended December 31,2021Revenues and gains: Sales revenue 2,224,000 Gain on sale of plant assets 115,500 Total revenues and gains 2,339,500Expenses Cost of goods sold 1,305,000 Depreciation expense 165,400 Other operating expense 405,400 Total expenses 1,875,800Income before income taxes 463,700Income tax expense 265,000Net Income 198,700 Notes Acquisition of plant asset during 2021 600,900Sale proceeds from sale of plant asset 356,000Receipt for issuance of notes payable 384,900Payment for note payable 450,000Dividend paid 148,500Book value of equipment sold 240,500 RequirementsReconstruct the company’s comparative balance sheet for 2020/2021 using the information in table above and 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 using the information in the table above

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 52PSB

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The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been distributed 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.

The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your first name initial. Having identified the information you are next required to address the requirements outlined below.

Auga Company Ltd.
Comparative Balance Sheet
December 31, 2020 and 2021
	2021	2020	Increase/(Decrease)
Assets
Cash	238,000	215,200	?
Accounts Receivable	303,200	259,300	?
Inventories	358,300	348,200	?
Prepaid expenses	35,350	43,100	?
Intangible assets	205,000	205,000	?
Plant assets, net	1,105,000	910,000	?
Total Assets	2,244,850	1,980,800
Liabilities
Accounts payable	254,300	240,000	?
Accrued liabilities	415,300	410,000	?
Income tax payable	115,000	135,400	?
Long-term notes payable	845,400	910,500	?
Stockholders' Equity
Common Stock	295,500	275,300	?
Retained earnings	345,600	295,400	?
Treasury stock	(26,250)	(285,800)	?
Total liabilities and stockholders' equity	2,244,850	1,980,800

Auga Company Ltd.
Income Statement
Year Ended December 31,2021
Revenues and gains:
Sales revenue	2,224,000
Gain on sale of plant assets	115,500
Total revenues and gains		2,339,500
Expenses
Cost of goods sold	1,305,000
Depreciation expense	165,400
Other operating expense	405,400
Total expenses		1,875,800
Income before income taxes		463,700
Income tax expense		265,000
Net Income		198,700

Notes
Acquisition of plant asset during 2021		600,900
Sale proceeds 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

Requirements

Reconstruct the company’s comparative balance sheet for 2020/2021 using the information in table above and 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 using the information in the table above

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