Explanation Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company. Direct method: This method uses the basis of cash for preparing the cash flows statement. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year. Prepare the statement of cash flows of Corporation G for the year ended December 31, 2015 under direct method. Corporation G Statement of Cash Flows - Direct method For Year Ended December 31, 2015 Particulars Amount Amount Cash flows from operating activities Cash received from customers (1) $1,188,650 Cash paid for inventory (2) ($669,150) Cash paid for other expenses (3) ($360,950) Cash paid for income taxes ($28,350) Net cash provided by operating activities $130,200 Cash flows from investing activities Cash received from sale of equipment $26,050 Cash paid for equipment ($43,250) Net cash provided by investing activities ($17,200) Cash flows from financing activities Cash proceeds from borrowing of short-term note $5,000 Cash paid to long-term notes payable ($47,500) Cash proceeds from the issuance of stock $45,000 Cash paid for dividends ($53,600) Net cash used in financing activities ($51,100) Net increase in cash and cash equivalents $61,900 Cash and cash equivalents balance as of December 31, 2014 $61,550 Cash and cash equivalents balance as of December 31, 2015 $123,450 Table (1) Disclosure Notes: Non-cash investing and financing activities: An equipment costing $113,250 have been purchased during the year, out of which $43,250 paid in cash and the balance by signing long term notes payable of $70,000 ( $ 113 , 250 − $ 43 , 250 ) . Working Note: Determine the changes in current assets and Liabilities. Schedule in the changes of assets and liabilities Particulars Amount Current year (December 31, 2015) Previous year (December 31, 2014) Increase/ (Decrease) Accounts receivable $77,100 $80,750 ($3,650) Inventory $240,600 $250,700 ($10,100) Prepaid expenses $15,100 $17,000 ($1,900) Accounts payable $17,750 $102,000 ($84,250) Table (2) Determine the cash received from customers

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ISBN: 9781259690457

Author: Wild

Publisher: MCGRAW-HILL CUSTOM PUBLISHING

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Chapter 12, Problem 5BP

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Prepare the statement of cash flows of Corporation G for the year ended December 31, 2015 using direct method.

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FINANCIAL ACCOUNTING ACCT 2301 >IC<

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