Natalie King has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CPU Hardware Designers. All amounts are in thousands (000s). CPU HARDWARE DESIGNERS Statement of Cash Flows For the year ended December 31, 2021 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities Cash Flows from Investing Activities Net cash flows from investing activities Cash Flows from Financing Activities Net cash flows from financing activities Net increase (decrease) in cash $(49,600) Cash at the beginning of the period 72,000 Cash at the end of the period $22,400 Below, in random order, are line items to be included in the statement of cash flows. Cash received from the sale of land (no gain or loss) $2,200 Issuance of common stock 210,000 Depreciation expense 30,000 Increase in accounts receivable 52,000 Increase in accounts payable 10,000 Loss on sale of land 6,200 Purchase of equipment 212,000 Increase in inventory 22,000 Increase in prepaid rent 10,000 Payment of dividends 32,000 Net income 62,000 Repayment of notes payable 42,000 Required: Prepare the statement of cash flows for CPU Hardware Designers using the indirect method. (List cash outflows and any decrease in cash as negative amounts. Enter your answers in thousands (i.e., 10,000,000 should be entered as "10,000).) CPU HARDWARE DESIGNERS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities $0 Cash Flows from Investing Activities Net cash flows from investing activities 0 Cash Flows from Financing Activities Net cash flows from financing activities 0 Cash at the beginning of the period Cash at the end of the period $0
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.
Natalie King has completed the basic format to be used in preparing the statement of
| CPU HARDWARE DESIGNERS Statement of Cash Flows For the year ended December 31, 2021 |
|
| Cash Flows from Operating Activities | |
| Net income | |
| Adjustments to reconcile net income to net cash flows from operating activities: | |
| Net cash flows from operating activities | |
| Cash Flows from Investing Activities | |
| Net cash flows from investing activities | |
| Cash Flows from Financing Activities | |
| Net cash flows from financing activities | |
| Net increase (decrease) in cash | $(49,600) |
| Cash at the beginning of the period | 72,000 |
| Cash at the end of the period | $22,400 |
Below, in random order, are line items to be included in the statement of cash flows.
| Cash received from the sale of land (no gain or loss) | $2,200 |
| Issuance of common stock | 210,000 |
| 30,000 | |
| Increase in |
52,000 |
| Increase in accounts payable | 10,000 |
| Loss on sale of land | 6,200 |
| Purchase of equipment | 212,000 |
| Increase in inventory | 22,000 |
| Increase in prepaid rent | 10,000 |
| Payment of dividends | 32,000 |
| Net income | 62,000 |
| Repayment of notes payable | 42,000 |
Required:
Prepare the statement of cash flows for CPU Hardware Designers using the indirect method. (List
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