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Cornerstones of Financial Accounti...

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Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
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Using a Spreadsheet to Prepare a Statement of Cash Flows

Jane Bahr, a controller of Endicott & Thurston, prepared the following balance sheets at the end of 2019 and 2018:

Chapter 11, Problem 59PSA, Using a Spreadsheet to Prepare a Statement of Cash Flows Jane Bahr, a controller of Endicott &

Required:

1. Using a spreadsheet, prepare a statement of cash flows for 2019. Assume Endicott & Thurston use the indirect method.

2. CONCEPTUAL CONNECTEON Discuss whether Endicott & Thurston appear to have matched the timing of inflows and outflows of cash.

To determine

(a)

Concept introduction:

Cash flow statement: It shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

To prepare:

Cash Flow Statement for 2019 using indirect method.

Explanation

Cash Flow Statement

Cash Flow from operating activities Amount ($)
Net Income for the period 70,000
Adjustment required for reconciliation:
Depreciation 42,000
Loss on sale of equipment 15,000
Loss on sale of investments 2,000
Decrease in Accounts Receivable 141,000
Decrease in Prepaid Rent 75,000
Decrease in Accounts Payable (2,000)
Decrease in Salaries Payable (16,000)
Net Cash Flow from Operating Activities 327,000
Cash Flow from Investing Activities
Equipment Purchases (376,000)
Equipment Sale 5,000
To determine

(b)

Concept introduction:

Cash flow statement: It shows inflow and outflow of cash and it is divided into three categories, i.e., operating, investing and financing activities. It is also known as statement of cash flows.

ToExplain:

Whether the company had matching cash inflows and outflows.

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