The 2014 comparative balance sheet and 2014 income statement of Byfield Co 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. Having identified the information in line with your surname you are next required to address the requirements outline below. Financial info to be used by H Simple Things Industries Ltd. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/(Decrease) Assets Cash 238,000 138,000 ? Accounts Receivable 325,000 300,000 ? Inventories 280,000 350,000 ? Prepaid expenses 28,000 35,000 ? Intangible assets 328,000 328,000 ? Plant assets, net 1,200,000 980,000 ? Total Assets 2,399,000 2,131,000 Liabilities Accounts payable 180,000 240,000 ? Accrued liabilities 310,000 415,000 ? Income tax payable 105,000 100,000 ? Long-term notes payable 1,350,000 800,000 ? Stockholders' Equity Common Stock 330,000 295,000 ? Retained earnings 450,000 345,500 ? Treasury stock (326,000) (64,500) ? Total liabilities and stockholders' equity 2,399,000 2,131,000 Simple Things Industries Ltd Income Statement Year Ended December 31,2014 Revenues and gains: Sales revenue 2,450,000 Gain on sale of plant assets 103,200 Total revenues and gains 2,553,200 Expenses Cost of goods sold 945,000 Depreciation expense 185,000 Other operating expense 398,500 Total expenses 1,528,500 Income before income taxes 1,024,700 Income tax expense 245,000 Net Income 779,700 Notes Acquisition of plant asset during 2014 610,000 Sale proceed from sale of plant asset 308,200 Receipt for issuance of notes payable 870,000 Payment for note payable 320,000 Dividend paid 675,200 Book value of equipment sold 205,000 Requirements Reconstruct the company’s comparative balance sheet for 2013/2014 using the information and compute and show the missing figures to include the appropriate sign as a positive or negative figure. Which category of the statement of cash flow is considered as the most important? Why? Prepare a complete statement of cash flows for 2014 using the indirect method using the information.
The 2014 comparative balance sheet and 2014 income statement of Byfield Co 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.
Having identified the information in line with your surname you are next required to address the requirements outline below.
Financial info to be used by H
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Simple Things Industries Ltd. |
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Comparative Balance Sheet |
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December 31, 2014 and 2013 |
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2014 |
2013 |
Increase/(Decrease) |
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Assets |
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Cash |
238,000 |
138,000 |
? |
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Accounts Receivable |
325,000 |
300,000 |
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Inventories |
280,000 |
350,000 |
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Prepaid expenses |
28,000 |
35,000 |
? |
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Intangible assets |
328,000 |
328,000 |
? |
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Plant assets, net |
1,200,000 |
980,000 |
? |
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Total Assets |
2,399,000 |
2,131,000 |
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Liabilities |
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Accounts payable |
180,000 |
240,000 |
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Accrued liabilities |
310,000 |
415,000 |
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Income tax payable |
105,000 |
100,000 |
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Long-term notes payable |
1,350,000 |
800,000 |
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Common Stock |
330,000 |
295,000 |
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450,000 |
345,500 |
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(326,000) |
(64,500) |
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Total liabilities and stockholders' equity |
2,399,000 |
2,131,000 |
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Simple Things Industries Ltd |
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Income Statement |
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Year Ended December 31,2014 |
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Revenues and gains: |
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Sales revenue |
2,450,000 |
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Gain on sale of plant assets |
103,200 |
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Total revenues and gains |
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2,553,200 |
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Expenses |
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Cost of goods sold |
945,000 |
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185,000 |
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Other operating expense |
398,500 |
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Total expenses |
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1,528,500 |
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Income before income taxes |
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1,024,700 |
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Income tax expense |
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245,000 |
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Net Income |
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779,700 |
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Notes |
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Acquisition of plant asset during 2014 |
610,000 |
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Sale proceed from sale of plant asset |
308,200 |
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Receipt for issuance of notes payable |
870,000 |
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Payment for note payable |
320,000 |
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Dividend paid |
675,200 |
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Book value of equipment sold |
205,000 |
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Requirements
- Reconstruct the company’s comparative balance sheet for 2013/2014 using the information and compute and show the missing figures to include the appropriate sign as a positive or negative figure.
- Which category of the statement of cash flow is considered as the most important? Why?
- Prepare a complete statement of cash flows for 2014 using the indirect method using the information..
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