Statement of Cash Flows—Indirect Method The following balances are available for Chrisman Company: December 31 2017 2016 Cash $7,800 $9,800 Accounts receivable 19,500 14,600 Inventory 15,500 25,900 Prepaid rent 8,800 5,900 Land 73,100 73,100 Plant and equipment 390,000 292,500 Accumulated depreciation (63,400) (29,300) Totals $451,300 $392,500 Accounts payable $11,700 $9,800 Income taxes payable 2,900 4,900 Short-term notes payable 34,100 24,400 Bonds payable 73,000 98,000 Common stock 195,000 146,300 Retained earnings 134,600 109,100 Totals $451,300 $392,500 Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $34,100. Net income was reported at $25,500. Required: 1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash. Chrisman Company Statement of Cash Flows For the Year Ended December 31, 2017 Cash Flows from Operating Activities Net income $fill in the blank Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense fill in the blank Increase in accounts receivable fill in the blank Decrease in inventory fill in the blank Increase in prepaid rent fill in the blank Increase in accounts payable fill in the blank Decrease in income taxes payable fill in the blank Net cash provided by operating activities $fill in the blank Cash Flows from Investing Activities Acquisition of plant and equipment $fill in the blank Cash Flows from Financing Activities Retirement of bonds payable $fill in the blank Issuance of short-term notes payable fill in the blank Issuance of common stock fill in the blank Net cash provided by financing activities $fill in the blank Net decrease in cash $fill in the blank
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Statement of
The following balances are available for Chrisman Company:
|
December 31 |
|||
| 2017 | 2016 | ||
| Cash | $7,800 | $9,800 | |
| 19,500 | 14,600 | ||
| Inventory | 15,500 | 25,900 | |
| Prepaid rent | 8,800 | 5,900 | |
| Land | 73,100 | 73,100 | |
| Plant and equipment | 390,000 | 292,500 | |
| (63,400) | (29,300) | ||
| Totals | $451,300 | $392,500 | |
| Accounts payable | $11,700 | $9,800 | |
| Income taxes payable | 2,900 | 4,900 | |
| Short-term notes payable | 34,100 | 24,400 | |
| Bonds payable | 73,000 | 98,000 | |
| Common stock | 195,000 | 146,300 | |
| 134,600 | 109,100 | ||
| Totals | $451,300 | $392,500 |
Bonds were retired during 2017 at face value, plant and equipment were acquired for cash, and common stock was issued for cash. Depreciation expense for the year was $34,100. Net income was reported at $25,500.
Required:
1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments,
| Chrisman Company | |
| Statement of Cash Flows | |
| For the Year Ended December 31, 2017 | |
| Cash Flows from Operating Activities | |
| Net income | $fill in the blank |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| Depreciation expense | fill in the blank |
| Increase in accounts receivable | fill in the blank |
| Decrease in inventory | fill in the blank |
| Increase in prepaid rent | fill in the blank |
| Increase in accounts payable | fill in the blank |
| Decrease in income taxes payable | fill in the blank |
| Net cash provided by operating activities | $fill in the blank |
| Cash Flows from Investing Activities | |
| Acquisition of plant and equipment | $fill in the blank |
| Cash Flows from Financing Activities | |
| Retirement of bonds payable | $fill in the blank |
| Issuance of short-term notes payable | fill in the blank |
| Issuance of common stock | fill in the blank |
| Net cash provided by financing activities | $fill in the blank |
| Net decrease in cash | $fill in the blank |
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