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. Financial info to be used by surnames with initials (S, W, G, Z) Financial info to be used by surnames with initials (S, W, G, Z) Simple Things Industries Ltd. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/(Decrease) Assets Cash 175,000 15,000 ? Accounts Receivable 230,000 220,000 ? Inventories 310,000 340,000 ? Prepaid expenses 30,000 10,000 ? Intangible assets 105,000 105,000 ? Equipment, net 860,000 830,000 ? Total Assets 1,710,000 1,520,000 Liabilities Accounts payable 90,000 140,000 ? Accrued liabilities 190,000 160,000 ? Income tax payable 120,000 140,000 ? Long-term notes payable 360,000 450,000 ? Stockholders' Equity Common Stock 400,000 250,000 ? Retained earnings 640,000 400,000 ? Treasury stock (90,000) (20,000) ? Total liabilities and stockholders' equity 1,710,000 1,520,000 Simple Things Industries Ltd Income Statement Year Ended December 31,2014 Revenues and gains: Sales revenue 1,900,000 Gain on sale of equipment 20,000 Total revenues and gains 1,920,000 Expenses Cost of goods sold 850,000 Depreciation expense 190,000 Other operating expense 360,000 Total expenses 1,400,000 Income before income taxes 520,000 Income tax expense 180,000 Net Income 340,000 Notes Acquisition of plant asset during 2014 320,000 Sale proceed from sale of equipment 120,000 Receipt for issuance of notes payable 10,000 Payment for note payable 100,000 Dividend paid 100,000 Book value of equipment sold 100,000 Requirements Reconstruct the company’s comparative balance sheet for 2013/2014 using the information ABOVE 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 ABOVE

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. Financial info to be used by surnames with initials (S, W, G, Z) Financial info to be used by surnames with initials (S, W, G, Z) Simple Things Industries Ltd. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/(Decrease) Assets Cash 175,000 15,000 ? Accounts Receivable 230,000 220,000 ? Inventories 310,000 340,000 ? Prepaid expenses 30,000 10,000 ? Intangible assets 105,000 105,000 ? Equipment, net 860,000 830,000 ? Total Assets 1,710,000 1,520,000 Liabilities Accounts payable 90,000 140,000 ? Accrued liabilities 190,000 160,000 ? Income tax payable 120,000 140,000 ? Long-term notes payable 360,000 450,000 ? Stockholders' Equity Common Stock 400,000 250,000 ? Retained earnings 640,000 400,000 ? Treasury stock (90,000) (20,000) ? Total liabilities and stockholders' equity 1,710,000 1,520,000 Simple Things Industries Ltd Income Statement Year Ended December 31,2014 Revenues and gains: Sales revenue 1,900,000 Gain on sale of equipment 20,000 Total revenues and gains 1,920,000 Expenses Cost of goods sold 850,000 Depreciation expense 190,000 Other operating expense 360,000 Total expenses 1,400,000 Income before income taxes 520,000 Income tax expense 180,000 Net Income 340,000 Notes Acquisition of plant asset during 2014 320,000 Sale proceed from sale of equipment 120,000 Receipt for issuance of notes payable 10,000 Payment for note payable 100,000 Dividend paid 100,000 Book value of equipment sold 100,000 Requirements Reconstruct the company’s comparative balance sheet for 2013/2014 using the information ABOVE 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 ABOVE

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

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Question

Financial info to be used by surnames with initials (S, W, G, Z)

	Simple Things Industries Ltd.
	Comparative Balance Sheet
	December 31, 2014 and 2013
		2014	2013	Increase/(Decrease)
	Assets
	Cash	175,000	15,000	?
	Accounts Receivable	230,000	220,000	?
	Inventories	310,000	340,000	?
	Prepaid expenses	30,000	10,000	?
	Intangible assets	105,000	105,000	?
	Equipment, net	860,000	830,000	?
	Total Assets	1,710,000	1,520,000
	Liabilities
	Accounts payable	90,000	140,000	?
	Accrued liabilities	190,000	160,000	?
	Income tax payable	120,000	140,000	?
	Long-term notes payable	360,000	450,000	?
	Stockholders' Equity
	Common Stock	400,000	250,000	?
	Retained earnings	640,000	400,000	?
	Treasury stock	(90,000)	(20,000)	?
	Total liabilities and stockholders' equity	1,710,000	1,520,000

	Simple Things Industries Ltd
	Income Statement
	Year Ended December 31,2014
	Revenues and gains:
	Sales revenue	1,900,000
	Gain on sale of equipment	20,000
	Total revenues and gains		1,920,000
	Expenses
	Cost of goods sold	850,000
	Depreciation expense	190,000
	Other operating expense	360,000
	Total expenses		1,400,000
	Income before income taxes		520,000
	Income tax expense		180,000
	Net Income		340,000
Notes
Acquisition of plant asset during 2014		320,000
Sale proceed from sale of equipment		120,000
Receipt for issuance of notes payable		10,000
Payment for note payable		100,000
Dividend paid		100,000
Book value of equipment sold		100,000

Requirements

Reconstruct the company’s comparative balance sheet for 2013/2014 using the information ABOVE 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 ABOVE

Expert Solution

Step 1

Following is the requisite Comparative balance sheet and Cash flow statement

Step 2

Comparative Balance sheet

Increase/ Decrease = Current year - Previous year

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