The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been distributed at a meeting of the company’s board of directors. The members of the board of directors were desirous of knowing the reason or reasons why the cash balance different from the net income. 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 directors. The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information ( see images)  Reconstruct the company’s comparative balance sheet for 2020/2021 using the information  and compute and show the missing figures to include the appropriate sign as a positive or negative figure.   2. Prepare a complete statement of cash flows for 2021 using the indirect method using the information

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The 2021 comparative balance sheet and income statement of Auga Company Ltd, have just been distributed at a meeting of the company’s board of directors. The members of the board of directors were desirous of knowing the reason or reasons why the cash balance different from the net income. 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 directors.

The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information ( see images) 

  1. Reconstruct the company’s comparative balance sheet for 2020/2021 using the information  and compute and show the missing figures to include the appropriate sign as a positive or negative figure.

 

2. Prepare a complete statement of cash flows for 2021 using the indirect method using the information

Auga Company Ltd
Comparative Balance Sheet
December 31, 2021 and 2020
2021
2020 Increase/(Decrease)
Assets
Cash
110,000
300,000
350,000
35,000
215,000
1,200,000
2,210,000
70,000
325,000
280,000
28,000
215,000
980,000
1,898,000
?
Accounts Receivable
?
Supplies
Prepaid expenses
Intangible assets
Equipment, net
Total Assets
?
Liabilities
Accounts payable
250,000
210,000
78,000
602,000
140,000
215,000
98,500
725,000
?
Accrued liabilities
?
Income tax payable
Long-term notes payable
Stockholders' Equity
?
410,000
730,000
Common Stock
330,000
450,000
Retained earnings
?
Treasury stock
Total liabilities and stockholders' equity
(70,000)
2,210,000
(60,500)
1,898,000
?
Transcribed Image Text:Auga Company Ltd Comparative Balance Sheet December 31, 2021 and 2020 2021 2020 Increase/(Decrease) Assets Cash 110,000 300,000 350,000 35,000 215,000 1,200,000 2,210,000 70,000 325,000 280,000 28,000 215,000 980,000 1,898,000 ? Accounts Receivable ? Supplies Prepaid expenses Intangible assets Equipment, net Total Assets ? Liabilities Accounts payable 250,000 210,000 78,000 602,000 140,000 215,000 98,500 725,000 ? Accrued liabilities ? Income tax payable Long-term notes payable Stockholders' Equity ? 410,000 730,000 Common Stock 330,000 450,000 Retained earnings ? Treasury stock Total liabilities and stockholders' equity (70,000) 2,210,000 (60,500) 1,898,000 ?
Auga Company Ltd
Income Statement
Year Ended December 31,2021
Revenues and gains:
2,100,000
85,000
Sales revenue
Gain on sale of Equipment
Total revenues and gains
Expenses
Cost of goods sold
Depreciation expense
Other operating expense
Total expenses
2,185,000
900,000
150,000
350,000
1,400,000
785,000
210,000
575,000
Income before income taxes
Income tax expense
Net Income
Notes
Acquisition of Equipment during 2021
540,000
Sale proceeds from sale of Equipment
255,000
Receipt for issuance of notes payable
27,000
Payment for note payable
150,000
Dividend paid
295,000
Book value of equipment sold
170,000
Transcribed Image Text:Auga Company Ltd Income Statement Year Ended December 31,2021 Revenues and gains: 2,100,000 85,000 Sales revenue Gain on sale of Equipment Total revenues and gains Expenses Cost of goods sold Depreciation expense Other operating expense Total expenses 2,185,000 900,000 150,000 350,000 1,400,000 785,000 210,000 575,000 Income before income taxes Income tax expense Net Income Notes Acquisition of Equipment during 2021 540,000 Sale proceeds from sale of Equipment 255,000 Receipt for issuance of notes payable 27,000 Payment for note payable 150,000 Dividend paid 295,000 Book value of equipment sold 170,000
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