Answered: Prepare a statement of cash flows,…

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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Question

The comparative balance sheet of Hirayama Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:

1		Dec. 31, 20Y2	Dec. 31, 20Y1
2	Assets
3	Cash	$488.00	$163.00
4	Accounts receivable (net)	283.00	203.00
5	Inventories	171.00	110.00
6	Land	396.00	455.00
7	Equipment	225.00	171.00
8	Accumulated depreciation-equipment	(56.00)	(26.00)
9	Total assets	$1,507.00	$1,076.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$173.00	$164.00
12	Dividends payable	26.00
13	Common stock, $1 par	98.00	47.00
14	Excess of paid-in capital over par	254.00	122.00
15	Retained earnings	956.00	743.00
16	Total liabilities and stockholders’ equity	$1,507.00	$1,076.00

The following additional information is taken from the records:

1.	Land was sold for $122.
2.	Equipment was acquired for cash.
3.	There were no disposals of equipment during the year.
4.	The common stock was issued for cash.
5.	There was a $313 credit to Retained Earnings for net income.
6.	There was a $100 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, decreases in cash and a net cash outflow for each section, if required.

Was Hirayama Industries Inc.’s net cash flows from operations more or less than net income? What is the source of this difference?

1 Cash flows from (used for) operating activities:
2
3
4
5
6
7
8
9
12
10
11 Cash flows from (used for) investing activities:
13
14
16
15 Cash flows from (used for) financing activities:
17
18
19
Hirayama Industries Inc.
Adjustments to reconcile net income to net cash flows from (used for) operating
activities:
Changes in current operating assets and liabilities:
Statement of Cash Flows
20 Cash balance, January 1, 20Y2
21 Cash balance, December 31, 20Y2
(Label)

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