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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Visual Inspection Gordon Company’s accounting records provided the following changes in account balances and other information for 2019:

Chapter 21, Problem 2E, Visual Inspection Gordon Companys accounting records provided the following changes in account

Additional information: Net income totaled $5,800. Dividends were declared and paid. Equipment was purchased for $8,800. No buildings and equipment were sold during the year. One hundred shares of common stock were sold for $55 per share. The ending cash balance was $4,200.

Required:

Using visual inspection, prepare a 2019 statement of cash flows for Gordon.

To determine

Prepare statement of cash flow for G Company using visual inspection.

Explanation

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Visual Inspection Method: Under visual inspection method, the user can review company’s financial statements and prepare its statement of cash flows without the use of worksheet.

Provide statement of cash flow for G Company using visual inspection:

G Company
Statement of cash flow for the year ended December 31, 2019
ParticularsAmount($)Amount($)
Operating Activities:  
Net income5,800 
Adjustment for non-cash income items:  
Add: Depreciation expenses2,900 
Adjustments for cash flow effects from working capital items:  
Decrease in accounts receivable1,100 

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