Connect Access Card for Financial Accounting
Connect Access Card for Financial Accounting
9th Edition
ISBN: 9781259738678
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 12, Problem 12.24E

1.

To determine

Complete the T-account worksheet that is used to prepare the statement of cash flows for the current year.

1.

Expert Solution
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Explanation of Solution

T-account:

T-account is the form of the ledger account, where the journal entries are posted to this account. It is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.

Following are the changes in cash accounts:

Cash (A)

Operating activities:

(1) Net income20,200(3) Inventory7,000
(2) Depreciation expense3,000(4) Accounts payable3,000
(3) Income taxes payable1,500(5) Wages payable1,500
Net cash flow provided by operating activities13,700  
Investing activities:
(7) Sale of equipment6,000(8) Purchased investments15,000
  Net cash flow provided by investing activities9,000
Financing activities:
(9) Proceeds from stock issuance6,000(10) Payment of dividends12,000
  Net cash flow used by financing activities6,000
  Net decrease in cash and cash equivalents1,300

Following are the changes in non-cash accounts:

Accounts receivable (A)
Beginning balance         22,000 
 
Ending balance              22,000 
Merchandise Inventory (A)
Beginning balance         68,000 
(3) Increase                      7,000 
Ending balance              75,000 
Accounts payable (L)
Beginning balance 
(4) Decrease                     7,000 17,000
Ending balance14,000
Wages payable (L)
Beginning balance2,500
(5) Decrease                     1,000
Ending balance1,500
Income taxes payable (L)
Beginning balance3,000
 (6) Increase1,500
Ending balance4,500
Equipment (A)
Beginning balance         114,500 
Purchases                                 0(7)Disposals21,000
Ending balance                93,500 
Accumulated Depreciation (XA)
Beginning balance32,000
 (7) Disposals(2)Depreciation3,000
Ending balance20,000
Investments (A)
Beginning balance                     0 
(8) Purchases                    15,000Disposals                           0
Ending balance                 15,000 
Contributed Capital (SE)
Beginning balance100,000
Stock repurchased(9)Stock issued6,000
Ending balance106,000
Retained Earnings (SE)
Beginning balance100,000
Stock repurchased(9) Stock issued6,000
Ending balance106,000

Note: L represents liabilities, XA represents contra-asset, A represents asset and SE represents stockholders’ equity.

2.

To determine

Prepare the statement of cash flows for the current year.

2.

Expert Solution
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Explanation of Solution

Statement of cash flows:

This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

Indirect method:

Indirect method uses the accrual basis of accounting, where the Net Income is adjusted to determine the net cash provided from operating activities.

Prepare the statement of cash flows for the current year of Company G.

Company G
Statement of Cash Flows (Indirect Method)
For the year ended December 31
ParticularsAmount ($)Amount ($)
Cash flows from operating activities:  
Net income20,200 
   Add: Depreciation expenses3,000
Changes in current assets and current liabilities  
    Less: Increase in inventory(7,000) 
    Less: Decrease in accounts payable(3,000) 
    Less: Decrease in wages payable(1,000) 
    Add: Increase in income taxes payable1,500
Net cash flows from operating activities 13,700
Cash flows from Investing activities:  
Less: Purchase of fixed assets(15,000) 
Add: Proceeds from sale of equipment6,000 
Net cash flows from investing activities (9,000)
Cash flows from Financing activities: 
Add: Sale of capital stock6,000 
Less: Dividends paid(12,000) 
Net cash flows from financing activities (6,000)
Net increase (decrease) in cash (1,300)
Cash balance at the beginning 20,500
Cash balance at the end 19,200

Table (1)

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Chapter 12 Solutions

Connect Access Card for Financial Accounting

Ch. 12 - Prob. 11QCh. 12 - What are noncash investing and financing...Ch. 12 - Prob. 13QCh. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 6MCQCh. 12 - Prob. 7MCQCh. 12 - Prob. 8MCQCh. 12 - Prob. 9MCQCh. 12 - Prob. 10MCQCh. 12 - Prob. 12.1MECh. 12 - Determining the Effects of Account Changes on Cash...Ch. 12 - Prob. 12.3MECh. 12 - Prob. 12.4MECh. 12 - Prob. 12.5MECh. 12 - Prob. 12.6MECh. 12 - Prob. 12.7MECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Reporting and Interpreting Cash Flows from...Ch. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Inferring Balance Sheet Changes from the Cash Flow...Ch. 12 - (Chapter Supplement B) Computing and Reporting...Ch. 12 - During the period, Sanchez Company sold some...Ch. 12 - Prob. 12.15ECh. 12 - Prob. 12.16ECh. 12 - Prob. 12.17ECh. 12 - Prob. 12.18ECh. 12 - Prob. 12.19ECh. 12 - Prob. 12.20ECh. 12 - Prob. 12.21ECh. 12 - (Chapter Supplement A) Reporting and Interpreting...Ch. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - (Chapter Supplement C) Preparing a Statement of...Ch. 12 - Prob. 12.1APCh. 12 - Prob. 12.2APCh. 12 - Prob. 12.3APCh. 12 - Prob. 12.1CONCh. 12 - Prob. 12.1CPCh. 12 - Prob. 12.2CPCh. 12 - Prob. 12.3CPCh. 12 - Prob. 12.4CPCh. 12 - Prob. 12.5CPCh. 12 - Prob. 12.6CP
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