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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Solpoder Corporation has the following comparative financial statements:

Chapter 14, Problem 45P, Solpoder Corporation has the following comparative financial statements: Dividends of 17,100 were , example  1

Chapter 14, Problem 45P, Solpoder Corporation has the following comparative financial statements: Dividends of 17,100 were , example  2

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.

To determine

Chart the statement of cash flows using the direct method.

Explanation

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
ParticularsIncome statement ($)Adjustments ($)Cash flows ($)
Cash flows from operating activities:   
Revenues297,00027,0001324,000
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:

(DifferenceinAccountsReceivable)=(AmountofAccountsReceivableof20X2AmountofAccountsReceivableof20X1)=($108,000$135,000)=$27,000

2

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