Scenario: The 2020 comparative balance sheet and 2020 income statement of Maple Group Ltd, have just been prepare and presented to the owners by the company’s Accountant. Upon close examination of the financial information received, it was discovered that some figures in the balance sheet were erroneously omitted due to an oversight by the accountant who is not available to fix the problem due to his unavoidable absence from work. In addition, the owners were concerned about the movement in the company’s cash and cash equivalent given that the balance sheet does not show or explain the reason or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners. Based on the following scenario answer these. Requirements (i)How can the owners use the cash flow information or what can the statement of cash flows helps the owners to do? (ii)Reconstruct the company’s comparative balance sheet for 2019/2020 using the information in line with your first name initial and compute and show the missing figures to include the appropriate sign as a positive or negative figure. (iii)Prepare a complete statement of cash flows for 2020 using the indirect method using the information in line with your first name initial.

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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Scenario:

The 2020 comparative balance sheet and 2020 income statement of Maple Group Ltd, have just been prepare and presented to the owners by the company’s Accountant. Upon close examination of the financial information received, it was discovered that some figures in the balance sheet were erroneously omitted due to an oversight by the accountant who is not available to fix the problem due to his unavoidable absence from work. In addition, the owners were concerned about the movement in the company’s cash and cash equivalent given that the balance sheet does not show or explain the reason or reasons why there was an increase or decrease in this area. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the owners.

Based on the following scenario answer these.

Requirements

(i)How can the owners use the cash flow information or what can the statement of cash flows helps the owners to do?

(ii)Reconstruct the company’s comparative balance sheet for 2019/2020 using the information in line with your first name initial and compute and show the missing figures to include the appropriate sign as a positive or negative figure.

(iii)Prepare a complete statement of cash flows for 2020 using the indirect method using the information in line with your first name initial.

Maple Group Ltd
Income Statement
Year Ended December 31,2020
Revenues and gains:
375,000
11,800
Sales revenue
Interest revenue
Total revenues and gains
Expenses
Cost of goods sold
Depreciation expense
Other operating expense
Interest expense
Total expenses
386,800
205,500
15,500
126,000
24,300
371,300
15,500
16,300
Income before income taxes
Income tax expense
Net Loss
(800)
Notes
Acquisition of fixed asset during 2020
Sale proceed from sale of plant asset
Receipt for issuance of notes payable
Payment for note payable
Dividend paid
Book value of equipment sold
56,800
3,000
13,200

Financial info to be used by first names with initials (A, P, I, E, V)
Maple Group Ltd
Comparative Balance Sheet
December 31, 2020 and 2019
2020
2019 Increase/(Decrease)
Assets
Cash and cash equivalent
Accounts Receivable
25,900
(10,600)
43,200
93,700
251,600
403,800
39,000
Inventories
?
(46,200)
Fixed Assets, net
Total Assets
415,100
|(11,300)
Liabilities
Accounts payable
Accrued liabilities
26,600
22,800
21,000
?
(1,300)
65,000
Long-term notes payable
Stockholders' Equity:
?
Common Stock
Retained earnings
?
1,400
161,000
175,000
(14,000)
Treasury stock
Total liabilities and stockholders' equity
403,800
415,100
(11,300)

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