The comparative balance sheet of Hirayama Industries Inc. for December 31, 20Y2 and 20Y1, is as follows: 1 Dec. 31, 20Y2 Dec. 31, 20Y1 2 Assets 3 Cash $486.00 $158.00 4 Accounts receivable (net) 280.00 195.00 5 Inventories 172.00 110.00 6 Land 400.00 453.00 7 Equipment 223.00 172.00 8 Accumulated depreciation-equipment (60.00) (27.00) 9 Total assets $1,501.00 $1,061.00 10 Liabilities and Stockholders’ Equity 11 Accounts payable (merchandise creditors) $180.00 $161.00 12 Dividends payable 32.00 13 Common stock, $1 par 105.00 45.00 14 Excess of paid-in capital over par 247.00 121.00 15 Retained earnings 937.00 734.00 16 Total liabilities and stockholders’ equity $1,501.00 $1,061.00 1 Dec. 31, 20Y2 Dec. 31, 20Y1 2 Assets 3 Cash $486.00 $158.00 4 Accounts receivable (net) 280.00 195.00 5 Inventories 172.00 110.00 6 Land 400.00 453.00 7 Equipment 223.00 172.00 8 Accumulated depreciation-equipment (60.00) (27.00) 9 Total assets $1,501.00 $1,061.00 10 Liabilities and Stockholders’ Equity 11 Accounts payable (merchandise creditors) $180.00 $161.00 12 Dividends payable 32.00 13 Common stock, $1 par 105.00 45.00 14 Excess of paid-in capital over par 247.00 121.00 15 Retained earnings 937.00 734.00 16 Total liabilities and stockholders’ equity $1,501.00 $1,061.00 The following additional information is taken from the records: 1. Land was sold for $120. 2. Equipment was acquired for cash. 3. There were no disposals of equipment during the year. 4. The common stock was issued for cash. 5. There was a $299 credit to Retained Earnings for net income. 6. There was a $96 debit to Retained Earnings for cash dividends declared. Required: a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow for each section, if required. b. Was Hirayama Industries Inc.’s net cash flows from operations more or less than net income? What is the source of this difference? Labels December 31, 20Y2 For the Year Ended December 31, 20Y2
The comparative balance sheet of Hirayama Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:
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1
Dec. 31, 20Y2 Dec. 31, 20Y1 2 Assets
3 Cash $486.00 $158.00 4 280.00 195.00 5 Inventories 172.00 110.00 6 Land 400.00 453.00 7 Equipment 223.00 172.00 8 Accumulated (60.00) (27.00) 9 Total assets $1,501.00 $1,061.00 10 Liabilities and
11 Accounts payable (merchandise creditors) $180.00 $161.00 12 Dividends payable 32.00
13 Common stock, $1 par 105.00 45.00 14 Excess of paid-in capital over par 247.00 121.00 15 937.00 734.00 16 Total liabilities and stockholders’ equity $1,501.00 $1,061.00 |
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1 |
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Dec. 31, 20Y2 |
Dec. 31, 20Y1 |
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2 |
Assets |
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3 |
Cash |
$486.00 |
$158.00 |
|
4 |
Accounts receivable (net) |
280.00 |
195.00 |
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5 |
Inventories |
172.00 |
110.00 |
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6 |
Land |
400.00 |
453.00 |
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7 |
Equipment |
223.00 |
172.00 |
|
8 |
Accumulated depreciation-equipment |
(60.00) |
(27.00) |
|
9 |
Total assets |
$1,501.00 |
$1,061.00 |
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10 |
Liabilities and Stockholders’ Equity |
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|
11 |
Accounts payable (merchandise creditors) |
$180.00 |
$161.00 |
|
12 |
Dividends payable |
32.00 |
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13 |
Common stock, $1 par |
105.00 |
45.00 |
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14 |
Excess of paid-in capital over par |
247.00 |
121.00 |
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15 |
Retained earnings |
937.00 |
734.00 |
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16 |
Total liabilities and stockholders’ equity |
$1,501.00 |
$1,061.00 |
The following additional information is taken from the records:
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1. |
Land was sold for $120. |
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2. |
Equipment was acquired for cash. |
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3. |
There were no disposals of equipment during the year. |
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4. |
The common stock was issued for cash. |
|
5. |
There was a $299 credit to Retained Earnings for net income. |
|
6. |
There was a $96 debit to Retained Earnings for cash dividends declared. |
Required:
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a. |
Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net |
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b. |
Was Hirayama Industries Inc.’s net cash flows from operations more or less than net income? What is the source of this difference? |
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Labels |
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December 31, 20Y2 |
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For the Year Ended December 31, 20Y2 |
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Amount Descriptions |
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Amortization of intangible assets |
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Cash received from sale of land |
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Cash paid for purchase of equipment |
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Cash received from issuing common stock |
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Cash dividends |
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Decrease in accounts payable |
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Decrease in accounts receivable |
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Decrease in inventories |
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Depreciation |
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Gain on sale of land |
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Increase in accounts payable |
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Increase in accounts receivable |
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Increase in inventories |
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Loss on sale of land |
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Net increase in cash |
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Net decrease in cash |
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Net cash flows from operating activities |
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Net cash flows used for operating activities |
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Net cash flows from investing activities |
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Net cash flows used for investing activities |
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Net cash flows from financing activities |
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Net cash flows used for financing activities |
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Net income |
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Net loss |
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SOLUTION
CASH FLOW STATEMENT IS THE FINANCIAL STATEMENT THAT SHOWS HOW CHANGES IN BALANCE SHEET ACCOUNTS AND INCOME AFFECT CASH AND CASH EQUIVALENT AND BREAK DOWN THE ANALYSIS TO OPERATING , INVESTING AND FINANCIAL ACTIVITIES.
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