Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income.... Adjustments to reconcile net income to net cash flow from operating activities: $ 360,000 Depreciation.... Gain on sale of investments.... Changes in current operating assets and liabilities: Increase in accounts receivable...... 100,800 17,280 27,360 (36,000) Increase in inventories...... Increase in accounts payable ..... Decrease in accrued expenses payable.. Net cash flow from operating activities Cash flows from (used for) investing activities: Cash from sale of investments.... Cash used for purchase of land. Cash used for purchase of equipment. (3,600) (2,400) $ 463,440 $ 240,000 (259,200) (432,000) Net cash flow used for investing activities.. Cash flows from (used for) financing activities: Cash from sale of common stock .... (415,200) $ 312,000 Cash used for dividends ... (132,000) Net cash flow from financing activities. Increase (decrease) in cash..... 180,000 $ 47,760 Cash at the end of the year... 192,240 Cash at the beginning of the year... $240,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

The following statement of cash flows for Shasta Inc. was not correctly prepared:

Please see  the attachment for details:

a. List the errors you find in the statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
b. Prepare a corrected statement of cash flows.

Shasta Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
Net income....
Adjustments to reconcile net income to net
cash flow from operating activities:
$ 360,000
Depreciation....
Gain on sale of investments....
Changes in current operating assets and liabilities:
Increase in accounts receivable......
100,800
17,280
27,360
(36,000)
Increase in inventories......
Increase in accounts payable .....
Decrease in accrued expenses payable..
Net cash flow from operating activities
Cash flows from (used for) investing activities:
Cash from sale of investments....
Cash used for purchase of land.
Cash used for purchase of equipment.
(3,600)
(2,400)
$ 463,440
$ 240,000
(259,200)
(432,000)
Net cash flow used for investing activities..
Cash flows from (used for) financing activities:
Cash from sale of common stock ....
(415,200)
$ 312,000
Cash used for dividends ...
(132,000)
Net cash flow from financing activities.
Increase (decrease) in cash.....
180,000
$ 47,760
Cash at the end of the year...
192,240
Cash at the beginning of the year...
$240,000
Transcribed Image Text:Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 Cash flows from operating activities: Net income.... Adjustments to reconcile net income to net cash flow from operating activities: $ 360,000 Depreciation.... Gain on sale of investments.... Changes in current operating assets and liabilities: Increase in accounts receivable...... 100,800 17,280 27,360 (36,000) Increase in inventories...... Increase in accounts payable ..... Decrease in accrued expenses payable.. Net cash flow from operating activities Cash flows from (used for) investing activities: Cash from sale of investments.... Cash used for purchase of land. Cash used for purchase of equipment. (3,600) (2,400) $ 463,440 $ 240,000 (259,200) (432,000) Net cash flow used for investing activities.. Cash flows from (used for) financing activities: Cash from sale of common stock .... (415,200) $ 312,000 Cash used for dividends ... (132,000) Net cash flow from financing activities. Increase (decrease) in cash..... 180,000 $ 47,760 Cash at the end of the year... 192,240 Cash at the beginning of the year... $240,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education