Prepare a spreadsheet to support a cash flow statement of H Company for the year 2016.
Explanation of Solution
Statement of cash flows: Cash flow 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.
Worksheet: A worksheet is a spreadsheet used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.
Prepare a spreadsheet to support the statement of cash flows.
Table (1)
A statement of cash flows of H Company for the year 2016:
Table (2)
Working notes:
- (a) Calculate the net loss.
Particulars | Amount($) | Amount($) |
Revenues : | ||
Sales | 49,550 | |
Interest revenue | 790 | |
Gain on exchange of assets | 1,300 | |
Total revenue | 51,640 | |
Expenses: | ||
Cost of goods sold | 23,800 | |
Wages expense | 16,510 | |
Other operating expenses | 1,100 | |
2,700 | ||
Depreciation expense: equipment | 3,100 | |
Patent amortization | 815 | |
Interest expense | 1,715 | |
Loss on sale of investments | 200 | |
Loss on sale of building | (2,600) | |
Income tax expense | 500 | |
Total expenses | (53,040) | |
Net Loss | (1,400) |
Table (2)
Note: The $31,850 ending
(e) Calculate the increase in
(f) Calculate the increase in inventories.
(g) Calculate the decrease in prepaid items.
(h) Calculate the increase in accounts payable.
- (i) Calculate the decrease in interest payable.
- (j) Calculate the increase in wages payable.
- (l) Proceeds from issuance of bonds payable.
- (m) Students may have difficulty with the extraordinary loss transaction. This may be shown in journal entry form as follows:
Date | Accounts and Explanation | Debit ($) | Credit ($) |
Proceeds from sale of building | 2,200 | ||
Accumulated Depreciation | 3,200 | ||
Ordinary Loss(net) | 2,600 | ||
Buildings | 8000 | ||
(To record the sale of building) |
Table (3)
(n-1) Calculate the exchange of equipment for land.
(o)Calculate the proceeds from sale of long-term investment.
(p-1) Calculate the issuance of common stock for patent.
(p-2) Acquisition of patent by issuing common stock is $1,300,
(r) Calculate the bond discount amortization.
(s) Calculate net increase in cash.
Therefore, the net increase in cash is $820.
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Chapter 21 Solutions
Intermediate Accounting: Reporting and Analysis
- Spreadsheet from Trial Balance Heinz Companys post closing trial balance as of December 31, 2018, and the adjusted trial balance as of December 31, 2019, are shown here: A review of the accounting records reveals the following additional information: a. Bomb payable with a face value, book value, and market value of 14,000 were retired on June 30, 2019. b. Bonds payable with a face value of 8,000 were issued at 90.25 on August 1, 2019. They mature on August 1, 2024. The company uses the straight-line method to amortize the bond discount. c. The company sold a building that had an original cost of 8,000 and a book value of 4,800. The company received 2,200 in cash for the building and recorded a loss of 2,600. d. Equipment with a cost of 4,000 and a book value of 1,400 was exchanged for an acre of land valued at 2,700. No cash was exchanged. e. Long-term investments in bonds being held to maturity with a cost of 1,000 were sold for 800. f. Sixty-five shares of common stock were exchanged for a patent. The common stock was selling for 20 per share at the time of the exchange. Required: Prepare a spreadsheet to support a statement of cash flows for 2019.arrow_forwardReal-world annual report The financial statements for Nike, Inc. (NKE), are presented in Appendix E at the end of the text. The following additional information is available (in thousands): Instructions 1. Determine the following measures for the fiscal years ended May 31, 2017, and May 31, 2016. Round ratios and percentages to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory' h. Ratio of liabilities to stockholders equity i. Asset turnover j. Return on total assets, assuming interest expense is 82 million for the year ending May 31. 2017, and 33 million for the year ending May 31, 2016. k. k. Return on common stockholders equity l. Price-eamings ratio, assuming that the market price was 52.81 per share on May 31, 2017, and 54.35 per share on May 31, 2016. m. m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forwardMillennium Associates records bad debt using the allowance, income statement method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On February 5, Millennium Associates identifies one uncollectible account from Molar Corp in the amount of $1,330. On April 15, Molar Corp unexpectedly pays its account in full. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. February 5, 2018 identification entry C. Entry for payment on April 15, 2018arrow_forward
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