The 2014 comparative balance sheet and 2014 income statement of Simple Things Industries 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. Simple Things Industries Ltd. Comparative Balance Sheet December 31, 2014 and 2013   2014 2013 Increase/(Decrease)         Assets          Cash      190,000            30,000  ?    Accounts Receivable      220,000         230,000  ?    Supplies      340,000         310,000  ?    Prepaid expenses        10,000            30,000  ?    Intangible assets        90,000            90,000  ? Equipment, net      900,000         790,000  ? Total Assets  1,750,000      1,480,000         Liabilities          Accounts payable      140,000            90,000  ?    Accrued liabilities      160,000         190,000  ?    Income tax payable      140,000         120,000  ? Long-term notes payable      450,000         500,000  ?       Stockholders' Equity       Common Stock      310,000         200,000  ? Retained earnings      640,000         400,000  ? Treasury stock      (90,000)          (20,000)  ? Total liabilities and stockholders' equity  1,750,000      1,480,000       Simple Things Industries Ltd   Income Statement   Year Ended December 31,2014   Revenues and gains:          Sales revenue  1,900,000        Gain on sale of Equipment        60,000           Total revenues and gains        1,960,000   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           560,000   Income tax expense           180,000   Net Income           380,000     Notes     Acquisition of Equipment during 2014           450,000 Sale proceed from sale of Equipment           210,000 Receipt for issuance of notes payable              50,000 Payment for note payable           100,000 Dividend paid           140,000 Book value of equipment sold       Requirements 1. 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. 2. Which category of the statement of cash flow is considered as the most important? Why? 3.Prepare a complete statement of cash flows for 2014 using the indirect method using the information.

Question

The 2014 comparative balance sheet and 2014 income statement of Simple Things Industries 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.

Simple Things Industries Ltd.

Comparative Balance Sheet

December 31, 2014 and 2013

 

2014

2013

Increase/(Decrease)

        Assets

 

 

 

   Cash

     190,000

           30,000

 ?

   Accounts Receivable

     220,000

        230,000

 ?

   Supplies

     340,000

        310,000

 ?

   Prepaid expenses

       10,000

           30,000

 ?

   Intangible assets

       90,000

           90,000

 ?

Equipment, net

     900,000

        790,000

 ?

Total Assets

 1,750,000

     1,480,000

 

      Liabilities

 

 

 

   Accounts payable

     140,000

           90,000

 ?

   Accrued liabilities

     160,000

        190,000

 ?

   Income tax payable

     140,000

        120,000

 ?

Long-term notes payable

     450,000

        500,000

 ?

      Stockholders' Equity

 

 

 

Common Stock

     310,000

        200,000

 ?

Retained earnings

     640,000

        400,000

 ?

Treasury stock

     (90,000)

         (20,000)

 ?

Total liabilities and stockholders' equity

 1,750,000

     1,480,000

 

 

 

Simple Things Industries Ltd

 

Income Statement

 

Year Ended December 31,2014

 

Revenues and gains:

 

 

 

   Sales revenue

 1,900,000

 

 

   Gain on sale of Equipment

       60,000

 

 

      Total revenues and gains

 

     1,960,000

 

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

 

        560,000

 

Income tax expense

 

        180,000

 

Net Income

 

        380,000

 

 

Notes

   

Acquisition of Equipment during 2014

 

        450,000

Sale proceed from sale of Equipment

 

        210,000

Receipt for issuance of notes payable

 

           50,000

Payment for note payable

 

        100,000

Dividend paid

 

        140,000

Book value of equipment sold

   

 

Requirements

1. 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.

2. Which category of the statement of cash flow is considered as the most important? Why?

3.Prepare a complete statement of cash flows for 2014 using the indirect method using the information.

 

 

 

 

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Final Accounts

Financial Accounting

Final Accounts for Companies

Accounting For Decision Making

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: The following are the balance sheet of X Ltd. And Y Ltd., as on 31 st march 2005 Liabilities R...

A: Click to see the answer

Q: Mar. 12   Blossom purchased $23,000 of merchandise from Dalibor Company, terms 2/10, n/30, FOB desti...

A: Discount on payment = (Purchases - Net Purchases) x Discount rate = ($23,000 - $2,700) x 2% = $406

Q: Goring Dairy leases its milking equipment from King Finance Company under the following lease terms....

A: Lessor refers to the person or the owner of an asset who leases or rents out, to another party who i...

Q: Luna Company calculates its predetermined rates using practical volume, which is 288,000 units. The ...

A: This numerical has covered the concept of Variance Analysis. 

Q: Appliances Inc. is preparing an aggregate production plan for washers for the next four months. The ...

A: Production plan: Production plan involves planning related to proper allocation of employees, resour...

Q: TB 06-60 On June 15, a retailer purchases merchandise on account On June 15, a retailer purchases me...

A: Journal entries refer to the recording of transactions in an appropriate way. With the help of journ...

Q: Below is budgeted production and sales information for Bluebird Company for the month of December. ...

A: The budget is prepared by the management on the basis of past experience. It is helpful in figuring ...

Q: Requirement 2. Prepare the stockholders ' equity section of the KCAS - TV balance sheet at September...

A: Click to see the answer

Q: Required information [The following information applies to the questions displayed below.]Sandra’s P...

A: Inventory: It refers to the items held by an organization which were in various forms like raw mater...

Q: PROJECT CASH FLOW Colsen Communications is trying to estimate the first-year cash flow (at Year 1) f...

A: Operating cash flows refers to the form of measurement which computes the total amount of cash flows...

Q: Compute for Materials yield variance

A: Materials yield variance occurs when there is more than 1 raw material used and standard ratio of mi...

Q: please help me with this =( On May 12, Wilcox Company accepted delivery of $20,000 of merchandise an...

A: Following are the Journal entries recorded

Q: A retailer purchases merchandise with a catalog list price of P15,000. The retailer receives a 15% t...

A: Net purchases = Purchases worth - Purchase discount = P15,000 - P15,000 x 15% = P12,750

Q: Required information[The following information applies to the questions displayedbelow.]Silver Compa...

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts fo...

Q: Accounting Question

A: Hello. Since your question has multiple parts, we will solve first question for you. If you want rem...

Q: An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes?

A: A cause and effect allocation basis is the cost allocation method in which the allocation base is ve...

Q: Brief Exercise 9-13 Blue Spruce Ltd. has a single investment that it acounts for using FV-OCI. The c...

A: Journal entry is the process of recording business transactions in the books of accounts for the fir...

Q: Production Budget Renegade Inc. projected sales of 60,000 personal journals for 20Y6. The estimated ...

A: Budgeted production = Budgeted sales + Desired ending inventory - Beginning inventory

Q: Horizontal analysis of income statement (What did I do wrong? Anyone know the correct answers to the...

A: Horizontal analysis is prepared to calculate the variance from previous year by showing increase/dec...

Q: An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes: ...

A: Cost allocation is dividing of all indirect cost between all cost objects based on the resources use...

Q: These financial statement items are for Crane Corporation at year-end, July 31, 2022. Salaries and w...

A: Statement of Retained Earnings: It is also known as the Statement of Changes in equity. It is one of...

Q: Scenario: The 2014 comparative balance sheet and 2014 income statement of Conrad Co Ltd, have just b...

A:   Conrad Industries Ltd.       Comparative Balance Sheet       December 31, 2014 and 2013    ...

Q: You have decided to throw a party next weekend for 19 friends. The friends are going to bring health...

A: Concept used : The planning to buy the bottles is depends upon the number of Total bottel required a...

Q: Current Position Analysis The following data were taken from the balance sheet of Nilo Company at th...

A: Click to see the answer

Q: 1. In accounting, we usually use historical cost (i.e. original price) on the balance sheet. However...

A: Answer 1: The carrying value is the lower cost and fair/market value of current investments. Regardi...

Q: Assume that you are a financial advisor to the CEO of a large conglomerate that has various business...

A: 1. Companies seek sources of funding to grow the business. It is also known as funding or financing....

Q: On April 1, Year 1, Brandi Corporation issued $20,000,000 of 5-year, 9% bondsat a market interest ra...

A: Premium on Bonds Payable = Issue value of bonds - Face value of Bonds = $20,811,010 - $20,000,000 = ...

Q: On August 31, 2019, Harvey and Ling, who file a joint return and live in Charleston, South Carolina,...

A: As per §121, the amount of exclusion for a person filing distinctly is $250,000. However, it is $500...

Q: PROBLEM 2-24 Income Statement; Schedule of Cost of Goods Manufactured [L01, LO2, LO3, LO4]. Visic Co...

A: Raw materials: It is the basic input required to manufacture the finished products. The raw material...

Q: 1.  why companies need to transfer price and advantages? 2. explain the transfer pricing method that...

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want...

Q: Horizontal analysis of income statement (No incorrect answers so far most Experts today are giving m...

A: Horizontal analysis is prepared to calculate the variance from previous year by showing increase/dec...

Q: Excerpt from the auditor’s report of the World Health Organization (WHO) financial statements for ye...

A: Auditing is the process of examination of financial report and associated books and supporting docum...

Q: On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $240,000 in...

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If y...

Q: Consider the account balances excerpted from the unadjusted trial balance and the adjustment data. U...

A: Adjusting entries are prepared at the end of the accounting period in order to ensure the accrual ba...

Q: why wouldn't email room memo like this work better as an innovation driven company such as Tulsa rat...

A: A memo is a short official note that is sent by one individual to another inside a similar organizat...

Q: A domestic appliance retailer with multiple outlets sells a popular toaster known as the Autocrisp 2...

A: We have the following information: Average sales 75 per day Maximum sales 95 per day Minimum sales ...

Q: Technology and complexity issues often lead management to simplify and to: Multiple Choice   Us...

A: Technology has no doubt, revolutionised the modern business world. However, it comes with its own se...

Q: Property, plant and Equipment           I submitted a screen shot of the problem, I cannot get th...

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts fo...

Q: 6. Partners Yacapin, Babar respectively. Yacapin w and are found to be ove P200,000 prior to Yacapi ...

A: Profit sharing ratio of Yacapin Babaran and Cuence  is = 5:3:2 Asset overvalued by 60000. So it has ...

Q: In which of the following scenario will the supplier be issuing a credit memo?   Granting of all...

A: In the case of defective merchandise the buyer may return the goods and in lieu of that supplier mus...

Q: Requirement: Prepare the statement of cash flows. Use the direct method of presenting cash flows fro...

A: Cash flow statement should be the most important because it reflects the actual financial position o...

Q: Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for portable game play...

A: Perpetual Inventory System:   Perpetual Inventory System refers to the inventory system that maintai...

Q: Performing services for cash will have the following effects on the components of the basic accounti...

A: The accounting equation refers to the equation of the balance sheet. It is based on the method of to...

Q: A key ethical issue in cost allocation involves costing in an international context, because the cho...

A: Direct costs are easily traceable but indirect costs are allocated which requires estimates and invo...

Q: Hello, Please explain the answer, thank you.

A: Benefits of callable bonds  1 Companies can redeem early by this way company can take advantage of a...

Q: An accountant needs to withhold 17% of income for taxes if the income is below $30,000, and 23% of i...

A: Spreadsheet: A spreadsheet is a worksheet. It is used while preparing a financial statement. It is ...

Q: Problem 16-72 (Algo) Variance Computations with Missing Data (LO 16-5, 6) The following information...

A: Variances: The variances are used to calculate the variation in actual cost by comparing it to the s...