Assume the following information: Item Beginning cash and cash equivalents Additions to plant and equipment Depreciation Amount $ 110,000 $ (180,000) $ 40,000 $ (25,000) $ (60,000) $ 21,000 $ 7,000 $ 30,000 During the year, the company did not sell any long-term investments, retire any bonds payable, or repurchase any common stock. Required: 1. Calculate the net cash provided by operating activities. 2. Calculate the net cash provided by (used in) investing activities. 3. Calculate the net cash provided by (used in) financing activities. 4. Calculate the cash and cash equivalents ending balance. Item Gain on sale of equipment Increase in accounts receivable Increase in accounts payable Proceeds from sale of equipment Issuance of bonds payable Decrease in income taxes payable Decrease in prepaid expenses Net income Cash dividends Additions to long-term investments Decrease in inventory Increase in accrued liabilities Issuance of common stock Amount $ (11,000) $ (11,000) $ 5,000 $ 70,000 $ 80,000 $ (4,000) $ 5,000 $ 115,000
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Exercise 15-5 (Static) Statement of Cash Flows [LO15-5]
Assume the following information:
Item
Beginning cash and cash equivalents
Additions to plant and equipment
Depreciation
Cash dividends
Additions to long-term investments
Decrease in inventory
Increase in accrued liabilities
Issuance of common stock
Amount
$ 110,000
$ (180,000)
$ 40,000
Item
Gain on sale of equipment
Increase in accounts receivable
Increase in accounts payable
Proceeds from sale of equipment
Issuance of bonds payable
Decrease in income taxes payable
Decrease in prepaid expenses
Net income
Amount
$ (11,000)
$ (11,000)
$ 5,000
$ (25,000)
$ (60,000)
$ 21,000
$ 7,000
$ 30,000
During the year, the company did not sell any long-term investments, retire any bonds payable, or repurchase any common stock.
Required:
1. Calculate the net cash provided by operating activities.
2. Calculate the net cash provided by (used in) investing activities.
3. Calculate the net cash provided by (used in) financing activities.
4. Calculate the cash and cash equivalents ending balance.
$ 70,000
$ 80,000
$ (4,000)
$ 5,000
$ 115,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01105c61-16b2-4ed7-8b58-345531cf6846%2F92071e07-f1de-47e3-bc01-449d078fb27b%2Fy5op1w_processed.png&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
