See images below and answer these questions according to the financial information givenRequirements1. Answer the following questions for the directors:A. True or false, does the statement of cash flows explains the differencebetween net income and the change in the cash balance?B. True or false, investors and management use the statement of cash flows to evaluate a firm's profitability?c. True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans?D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities?E. True or false, buying property, plant and equipment would be considered a cash outflow from financing?F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?c. True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would thistransaction be shown in the investing activities section of the statement ofcash flows?2. Reconstruct the company's comparative balance sheet for 2020/2021 usingthe information and compute and show the missing figures to include the appropriate sign as a positive or negativefigure.3. Prepare a complete statement of cash flows for 2021 using the indirectmethod using the information given Scenario:The 2021 comparative balance sheet and income statement of Auga CompanyLtd, 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 orreasons why the cash balance different from the net income. The company usesthe indirect method to prepare the statement of cash flows and it is expected thatthis should be able to provide the needed clarity required by the directors.The directors have asked each student from your accounting course to assistwith the needed clarification and have put forward the following financialinformation grouped according to your first name initial. (Hint!!!! Example firstname Boysie will use the initial B and that person should only use the infopresented in line with the heading with their first name initial. You are notallowed to use info associated with initials other than that of your own asthis will result in the forfeiture of the grade.) Please refer to the above rulerelating to double-barrel first name.Having identified the information in line with your first name you are next requiredto address the requirements outlined below. Financial info to be used by first names with initials (S, W, G, Z)Auga Company LtdComparative Balance SheetDecember 31, 2021 and 202020212020 Increase/(Decrease)AssetsCash175,00015,000?Accounts Receivable230,000220,000?Inventories310,000340,000?Prepaid expensesIntangible assetsEquipment, netTotal Assets30,00010,000?105,000105,000860,0001,710,000830,000?1,520,000LiabilitiesAccounts payable90,000140,000?160,000140,000450,000Accrued liabilities190,000?Income tax payableLong-term notes payableStockholders' EquityCommon StockRetained earningsTreasury stockTotal liabilities and stockholders' equity 1,710,000120,000?360,000?400,000640,000(90,000)250,000?400,000?(20,000)?1,520,000Auga Company LtdIncome StatementYear Ended December 31,2021Revenues and gains:1,900,00020,000Sales revenueGain on sale of plant assetsTotal revenues and gainsExpensesCost of goods soldDepreciation expenseOther operating expense1,920,000850,000190,000360,000Total expensesIncome before income taxesIncome tax expense1,400,000520,000180,000340,000Net IncomeNotesAcquisition of plant asset during 2021Sale proceeds from sale of plant assetReceipt for issuance of notes payablePayment for note payableDividend paidBook value of equipment sold320,000120,00010,000100,000100,000100,000

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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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See images below and answer these questions according to the financial information given Requirements 1. Answer the following questions for the directors: A. True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance? B. True or false, investors and management use the statement of cash flows to evaluate a firm's profitability? c. True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans? D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts? c. True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows? 2. Reconstruct the company's comparative balance sheet for 2020/2021 using the information and compute and show the missing figures to include the appropriate sign as a positive or negative figure. 3. Prepare a complete statement of cash flows for 2021 using the indirect method using the information given

Scenario:
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. (Hint!!!! Example first
name Boysie will use the initial B and that person should only use the info
presented in line with the heading with their first name initial. You are not
allowed to use info associated with initials other than that of your own as
this will result in the forfeiture of the grade.) Please refer to the above rule
relating to double-barrel first name.
Having identified the information in line with your first name you are next required
to address the requirements outlined below.

Financial info to be used by first names with initials (S, W, G, Z)
Auga Company Ltd
Comparative Balance Sheet
December 31, 2021 and 2020
2021
2020 Increase/(Decrease)
Assets
Cash
175,000
15,000
?
Accounts Receivable
230,000
220,000
?
Inventories
310,000
340,000
?
Prepaid expenses
Intangible assets
Equipment, net
Total Assets
30,000
10,000
?
105,000
105,000
860,000
1,710,000
830,000
?
1,520,000
Liabilities
Accounts payable
90,000
140,000
?
160,000
140,000
450,000
Accrued liabilities
190,000
?
Income tax payable
Long-term notes payable
Stockholders' Equity
Common Stock
Retained earnings
Treasury stock
Total liabilities and stockholders' equity 1,710,000
120,000
?
360,000
?
400,000
640,000
(90,000)
250,000
?
400,000
?
(20,000)
?
1,520,000
Auga Company Ltd
Income Statement
Year Ended December 31,2021
Revenues and gains:
1,900,000
20,000
Sales revenue
Gain on sale of plant assets
Total revenues and gains
Expenses
Cost of goods sold
Depreciation expense
Other operating expense
1,920,000
850,000
190,000
360,000
Total expenses
Income before income taxes
Income tax expense
1,400,000
520,000
180,000
340,000
Net Income
Notes
Acquisition of plant asset during 2021
Sale proceeds from sale of plant asset
Receipt for issuance of notes payable
Payment for note payable
Dividend paid
Book value of equipment sold
320,000
120,000
10,000
100,000
100,000
100,000

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