
1.
Prepare the T-accounts in order to report
1.

Explanation of Solution
T-account:
T-account is the form of the ledger account, where the
Following are the changes in cash accounts:
Cash (A) | |||
Operating activities | |||
(1) Net income | 7,000 | (4) Inventory | 3,000 |
(2) | 4,000 | ||
(3) | 2,000 | ||
(5) Accounts payable | 6,000 | ||
(6) Wages payable | 500 | ||
Net cash flow provided by operating activities | 16,500 | ||
Investing activities | |||
(7) Purchase of property, Plant and Equipment | 12,000 | ||
Net cash used in investing activities | 12,000 | ||
Financing activities | |||
(9) Proceeds from stock issuance | 18,500 | (8) Payment of long-term note | |
(10) Payment of dividends | |||
Net cash provided by financing activities | 10,500 | ||
Net increase in cash and cash equivalents | 15,000 |
Following are the changes in non-cash accounts:
Accounts receivable (A) | ||
Beginning balance 28,000 | ||
(3) Decrease | 2,000 | |
Ending balance 26,000 |
Inventory (A) | ||
Beginning balance 68,000 | ||
(4) Increase 7,000 | ||
Ending balance 75,000 |
Accounts payable (L) | ||
Beginning balance | 21,000 | |
(5) Increase | 6,000 | |
Ending balance | 27,000 |
Wages payable (L) | ||
Beginning balance | 1,000 | |
(6) Increase | 5,00 | |
Ending balance | 1,500 |
Fixed Assets-net (A) | ||
Beginning balance 72,000 | ||
(7) Purchases 12,000 | (2) Depreciation | 4,000 |
Ending balance 93,500 |
Note Payable Long-term (L) | ||
Beginning balance | 48,000 | |
(8) Payments | Borrowings | 0 |
Ending balance | 42,000 |
Common stock (SE) | ||
Beginning balance | 60,000 | |
Stock repurchased 0 | (9) Stock issued | 18,500 |
Ending balance | 78,500 |
Beginning balance | 24,000 | |
(10) Dividends | (1) Net income | 7,000 |
Ending balance | 29,000 |
Note: L represents liabilities, XA represents contra-asset, A represents asset and SE represents
2.
Prepare the statement of cash flows.
2.

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.
Prepare the statement of cash flows for the current year of Company H.
Company H | ||
Statement of Cash Flows (Indirect Method) | ||
For the year ended | ||
Particulars | Amount ($) | Amount ($) |
Cash flows from operating activities: | ||
Net income | 7,000 | |
Add: Depreciation expenses | 4,000 | 11,000 |
Changes in current assets and current liabilities | ||
Add: Decrease in accounts receivable | 2,000 | |
Less: Increase in merchandise inventory | (3,000) | |
Add: Increase in accounts payable | 6,000 | |
Add: Increase in wages payable | 500 | |
Net cash flows from operating activities | 16,500 | |
Cash flows from Investing activities: | ||
Less: Purchase of fixed assets | (12,000) | |
Net cash flows from investing activities | (12,000) | |
Cash flows from Financing activities: | ||
Less: Cash payments on long-term note | (6,000) | |
Add: Cash receipts from issuing stock | 18,500 | |
Less: Cash payments for dividends | (2,000) | |
Net cash flows from financing activities | 10,500 | |
Net increase (decrease) in cash | 15,000 | |
Cash balance at the beginning (January 1) | 18,000 | |
Cash balance at the end ( December 31) | 33,000 |
Table (1)
3.
Prepare the schedule of noncash investing and financing activities if necessary
3.

Explanation of Solution
Noncash investing activities:
Noncash investing activities refer to the activities carried out by a company for acquisition of long term assets without inflow or outflow of cash in the statement of cash flows.
There is no need for preparing the schedule of noncash investing and financing activities as there are no noncash investing and financing activities during the year.
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