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How does Declan's Designs' 2022 common stock issuance impact its 2022 Statement of Cash Flows?   Question 28 options:   The common stock issuance is subtracted in Cash Flows from Investing   The common stock issuance is subtracted in Cash Flows from Financing   The common stock issuance is subtracted in Cash Flows from Operations   The common stock issuance is added in Cash Flows from Financing   The common stock issuance is added in Cash Flows from Investing   The common stock issuance is not included on the Statement of Cash Flows   The common stock issuance is added in Cash Flows from Operations

How does Declan's Designs' 2022 common stock issuance impact its 2022 Statement of Cash Flows?   Question 28 options:   The common stock issuance is subtracted in Cash Flows from Investing   The common stock issuance is subtracted in Cash Flows from Financing   The common stock issuance is subtracted in Cash Flows from Operations   The common stock issuance is added in Cash Flows from Financing   The common stock issuance is added in Cash Flows from Investing   The common stock issuance is not included on the Statement of Cash Flows   The common stock issuance is added in Cash Flows from Operations

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How does Declan's Designs' 2022 common stock issuance impact its 2022 Statement of Cash Flows?

 

Question 28 options:

 

The common stock issuance is subtracted in Cash Flows from Investing
 

The common stock issuance is subtracted in Cash Flows from Financing
 

The common stock issuance is subtracted in Cash Flows from Operations
 

The common stock issuance is added in Cash Flows from Financing
 

The common stock issuance is added in Cash Flows from Investing
 

The common stock issuance is not included on the Statement of Cash Flows
 

The common stock issuance is added in Cash Flows from Operations
Declan's Designs Balance Sheet Declan's Designs Income Statement ASSETS 12/31/2021 12/31/2022 For the Year Ending Current Assets 12/31/2022 Cash and Cash Equivalents Accounts Receivable, Net Merchandise Inventory Total Current Assets $90,000 97,000 400,000 587,000 $294,000 101,000 475,000 870,000 Sales Revenue $225,000 (16,000) 209,000 (22,000) 187,000 (12,000) (5,000) 170,000 (7,000) $163,000 CGS Gross Margin SG&A PPE, Net Goodwill, Net 62,000 600,000 $1,249,000 70,000 600,000 $1,540,000 Operating Income Interest Expense Total Assets Loss on Sale of PPE Pre-Tax Income Income Tax Expense LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Interest Payable Dividends Payable Net Income 26,000 3,000 20,000 49,000 17,000 5,000 10,000 32,000 Additional Information regarding Declan's Designs' 12/31/22 financials: Total Current Liabilities Mortgage Payable Long-Term Bank Loan Total Liabilities PROPERTY, PLANT & EQUIPMENT PPE is shown net accumulated depreciation. Accumulated depreciation was $18,000 at the beginning of the year and $20,000 at the end of the year. Depreciation expense for the year was $3,000, which is included in SG&A. New PPE was bought during the year for $22,000 (in cash). 500,000 500,000 200,000 732,000 549,000 Shareholder's Equity Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement. Preferred Stock Common Stock Hint #1: The most recent year is not always in the left column. Additional Paid in Capital Retained Earnings Total Shareholder’s Equity 8,000 54,000 638,000 700,000 10,000 60,000 738,000 808,000 Hint #2: Evaluate changes in gross PPE separate from changes in accumulated depreciation. Recall gross PPE less accumulated depreciation equals net PPE. Hint #3: Never “plug" the annual change in gross PPE. Separately evaluate the increase in gross PPE (capital expenditures) from the annual decrease in gross PPE (sale of PPE). Total Liabilities &Shareholders’ Equity $1,249,000 $1,540,000 Hint #4: The total change in cash due to stock issuances/repurchases is the sum of the change in common stock (stated par value) and additional paid in capital (APIC). Hint #5: Dividends declared (the decrease in RE) is not the same as dividends paid (the decrease in dividends payable). To find dividends paid, set up your dividends payable account with the beginning and ending balances from the balance sheet. Increase dividends paid by the amount of dividends declared. Then plug for the decrease in dividends payable (which represents dividends paid).
Transcribed Image Text:Declan's Designs Balance Sheet Declan's Designs Income Statement ASSETS 12/31/2021 12/31/2022 For the Year Ending Current Assets 12/31/2022 Cash and Cash Equivalents Accounts Receivable, Net Merchandise Inventory Total Current Assets $90,000 97,000 400,000 587,000 $294,000 101,000 475,000 870,000 Sales Revenue $225,000 (16,000) 209,000 (22,000) 187,000 (12,000) (5,000) 170,000 (7,000) $163,000 CGS Gross Margin SG&A PPE, Net Goodwill, Net 62,000 600,000 $1,249,000 70,000 600,000 $1,540,000 Operating Income Interest Expense Total Assets Loss on Sale of PPE Pre-Tax Income Income Tax Expense LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Interest Payable Dividends Payable Net Income 26,000 3,000 20,000 49,000 17,000 5,000 10,000 32,000 Additional Information regarding Declan's Designs' 12/31/22 financials: Total Current Liabilities Mortgage Payable Long-Term Bank Loan Total Liabilities PROPERTY, PLANT & EQUIPMENT PPE is shown net accumulated depreciation. Accumulated depreciation was $18,000 at the beginning of the year and $20,000 at the end of the year. Depreciation expense for the year was $3,000, which is included in SG&A. New PPE was bought during the year for $22,000 (in cash). 500,000 500,000 200,000 732,000 549,000 Shareholder's Equity Note: You may use the worksheet provided on the last page to help you prepare the Cash Flow Statement. Preferred Stock Common Stock Hint #1: The most recent year is not always in the left column. Additional Paid in Capital Retained Earnings Total Shareholder’s Equity 8,000 54,000 638,000 700,000 10,000 60,000 738,000 808,000 Hint #2: Evaluate changes in gross PPE separate from changes in accumulated depreciation. Recall gross PPE less accumulated depreciation equals net PPE. Hint #3: Never “plug" the annual change in gross PPE. Separately evaluate the increase in gross PPE (capital expenditures) from the annual decrease in gross PPE (sale of PPE). Total Liabilities &Shareholders’ Equity $1,249,000 $1,540,000 Hint #4: The total change in cash due to stock issuances/repurchases is the sum of the change in common stock (stated par value) and additional paid in capital (APIC). Hint #5: Dividends declared (the decrease in RE) is not the same as dividends paid (the decrease in dividends payable). To find dividends paid, set up your dividends payable account with the beginning and ending balances from the balance sheet. Increase dividends paid by the amount of dividends declared. Then plug for the decrease in dividends payable (which represents dividends paid).
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Cash Flow statements are the statement of changes in cash in an organization. Any non-cash item will not be taken into consideration.

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