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Managerial Accounting: The Corners...
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Managerial Accounting: The Corners...
Solpoder Corporation has the following comparative financial statements:
Dividends of $17,100 were paid. No equipment was purchased or retired during the current year.
Required:
Prepare a statement of cash flows using the direct method.
Chart the statement of cash flows using the direct method.
Cash Flow Statement:
Cash flow statement is a financial statement prepared to provide information about the sources and uses of cash in a firm. In this statement, the activities increasing cash are referred as cash inflows and the activities that decrease cash are referred as cash outflows. Financing and investing activities are two category of a cash flow statement.
The statement of cash flows for S Company for 20X2 using direct method is shown below:
| S Company | |||
| Statement of Cash Flow | |||
| For the year ended December 31, 20X2 | |||
| Particulars | Income statement ($) | Adjustments ($) | Cash flows ($) |
| Cash flows from operating activities: | |||
| Revenues | 297,000 | 27,0001 | 324,000 |
| Cost of goods sold | (175,500) | (27,000)2 | |
| (39,600)3 | (242,100) | ||
| Operating expenses | (58,500) | 9,0004 | (49,500) |
| Net cash from operating activities | 32,400 | ||
| Cash flows from financing activities: | |||
| Sale of common stock | 16,200 | ||
| Payment of dividends | (17,100) | ||
| Net cash from operating activities | (900) | ||
| Net increase in cash | 31,500 | ||
Table (1)
Therefore, there is a net increase in cash of $31,500.
Working Note:
1.
Calculation of difference in accounts receivable:
2
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