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Business Accounting Connect 2-Semester Access Card for Fundamental Accounting Principles

Cash Flow Statement : Cash Flow Statement is the statement reflecting the flow of Cash & Cash Equivalents. Cash : It includes Cash in Hand & Deposits with Bank. Cash Equivalents : It includes those investments which are short term investment and highly liquid i.e. maturity period is of three months or less. Operating Activities : Operating Activities are the principal revenue generating activities of enterprise. In other words activities that are not financing and investing activities. To Prepare: The Cash Flow from Operating Activities as on 31 s t Dec 2015. Solution: The Cash Flow from operating activities is $ 436,000/-. The statement showing Cash Flow from operating activities is below In the Books of SALUD COMPANY Cash Flow from Operating Activities For the year ended Dec 31, 2015 The Cash Flow from Operating Activities is $436,000/-. Explanations : The following are the steps involved in preparing statement showing cash flow from operating activities: Determine the Net Profit before Tax and Extra-Ordinary Items for the year 2015 Particulars Amount (In $) Profit after Tax for the Year ending Dec 31,2015(As per Income Statement) 400,000 Add: Provision for Tax* 0 Add/Less: Extra-Ordinary items debited/Credited in income statement& 0 Profit before Tax and Extra ordinary Items 400,000 * Since no information provided in question about Income Tax charged on company. Hence we are assuming that Income Tax is not charged on Company. Therefore, the given Net Income is before Tax. & Extra-Ordinary Items are expenses and income that arises from event or transaction that are distinct from ordinary activities of company. As no information is provided in the question. Hence we are assuming that extra-ordinary items are not debiting or crediting in income statement. Adjust Net Profit before Tax and Extra-Ordinary Items for Non Cash and Non-Operating Items :- Given: Non-Cash Expense- Depreciation Expense = $80,000 Non-Operating Income **minus; Gain on Sale of Machinery = $20,000 Particulars Amount(In $) Net profit before tax and extra-ordinary items (As per Step 1) 400,000 Add: Depreciation Expenses 80,000 Less: Gain on Sale of Equipment (20,000) Operating profit before working capital changes 460,000 Adjust Operating Profit before working Capital Changes with changes in Working Capital: Given: Increase in Accounts Receivable = $40,000 (Current Assets) Decrease in Prepaid Expenses = $12,000 (Current Assets) Increase in Accounts Payable=$6,000 (Current Liabilities) Decrease in Wages Payable=$2,000 (Current Liabilities) Particulars Amount(In $) Operating Profit before Tax and Extra Ordinary Items (As per Step 2) 460,000 Add: Decrease in Current Assets and Increase in Current Liabilities 18,000 Less: Increase in Current Assets and Decrease in Current Liabilities (42,000) Cash Generated from Operations 436,000 In this Step, calculation of Cash Flow from/ (Used in) Operating Activities. Particulars Amount (In $) Cash Generated from Operations (As computed in Step 3) 436,000 Less: Income Tax paid&* 0 Add/Less: Extra-Ordinary Items 0 Cash Flow from Operating Items 436,000 &* As Income Tax is not applicable on the Fitz Company so Income Tax Paid is “0”. Current Assets : Current Assets are the assets that are either in the form of Cash & Cash Equivalents or can be converted into Cash or Cash Equivalent within a short period of time i.e. 12 months. Current Liabilities: Current Liabilities are the liabilities which are repayable in a short period of time i.e. 12 months. Working Capital: Working Capital means excess of Current Assets over Current Liabilities. It can be calculated as “ Working Capital = Current Assets minus Current Liabilities” Conclusion: The Cash Flow from Operating Activities is $436,000/-.

Cash Flow Statement : Cash Flow Statement is the statement reflecting the flow of Cash & Cash Equivalents. Cash : It includes Cash in Hand & Deposits with Bank. Cash Equivalents : It includes those investments which are short term investment and highly liquid i.e. maturity period is of three months or less. Operating Activities : Operating Activities are the principal revenue generating activities of enterprise. In other words activities that are not financing and investing activities. To Prepare: The Cash Flow from Operating Activities as on 31 s t Dec 2015. Solution: The Cash Flow from operating activities is $ 436,000/-. The statement showing Cash Flow from operating activities is below In the Books of SALUD COMPANY Cash Flow from Operating Activities For the year ended Dec 31, 2015 The Cash Flow from Operating Activities is $436,000/-. Explanations : The following are the steps involved in preparing statement showing cash flow from operating activities: Determine the Net Profit before Tax and Extra-Ordinary Items for the year 2015 Particulars Amount (In $) Profit after Tax for the Year ending Dec 31,2015(As per Income Statement) 400,000 Add: Provision for Tax* 0 Add/Less: Extra-Ordinary items debited/Credited in income statement& 0 Profit before Tax and Extra ordinary Items 400,000 * Since no information provided in question about Income Tax charged on company. Hence we are assuming that Income Tax is not charged on Company. Therefore, the given Net Income is before Tax. & Extra-Ordinary Items are expenses and income that arises from event or transaction that are distinct from ordinary activities of company. As no information is provided in the question. Hence we are assuming that extra-ordinary items are not debiting or crediting in income statement. Adjust Net Profit before Tax and Extra-Ordinary Items for Non Cash and Non-Operating Items :- Given: Non-Cash Expense- Depreciation Expense = $80,000 Non-Operating Income **minus; Gain on Sale of Machinery = $20,000 Particulars Amount(In $) Net profit before tax and extra-ordinary items (As per Step 1) 400,000 Add: Depreciation Expenses 80,000 Less: Gain on Sale of Equipment (20,000) Operating profit before working capital changes 460,000 Adjust Operating Profit before working Capital Changes with changes in Working Capital: Given: Increase in Accounts Receivable = $40,000 (Current Assets) Decrease in Prepaid Expenses = $12,000 (Current Assets) Increase in Accounts Payable=$6,000 (Current Liabilities) Decrease in Wages Payable=$2,000 (Current Liabilities) Particulars Amount(In $) Operating Profit before Tax and Extra Ordinary Items (As per Step 2) 460,000 Add: Decrease in Current Assets and Increase in Current Liabilities 18,000 Less: Increase in Current Assets and Decrease in Current Liabilities (42,000) Cash Generated from Operations 436,000 In this Step, calculation of Cash Flow from/ (Used in) Operating Activities. Particulars Amount (In $) Cash Generated from Operations (As computed in Step 3) 436,000 Less: Income Tax paid&* 0 Add/Less: Extra-Ordinary Items 0 Cash Flow from Operating Items 436,000 &* As Income Tax is not applicable on the Fitz Company so Income Tax Paid is “0”. Current Assets : Current Assets are the assets that are either in the form of Cash & Cash Equivalents or can be converted into Cash or Cash Equivalent within a short period of time i.e. 12 months. Current Liabilities: Current Liabilities are the liabilities which are repayable in a short period of time i.e. 12 months. Working Capital: Working Capital means excess of Current Assets over Current Liabilities. It can be calculated as “ Working Capital = Current Assets minus Current Liabilities” Conclusion: The Cash Flow from Operating Activities is $436,000/-.

Connect 2-Semester Access Card for Fundamental Accounting Principles

Connect 2-Semester Access Card for Fundamental Accounting Principles

22nd Edition

ISBN: 9780077632755

Author: John Wild

Publisher: McGraw-Hill Education

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Chapter 16, Problem 5E

Chapter 16, Problem 7E

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Brightstar Industries began the year with stockholders' equity of $400,000. During the year, the company recorded revenues of $600,000 and expenses of $420,000, and paid dividends of $40,000. What was Brightstar Industries' stockholders' equity at the end of the year?

Chapter 16 Solutions

Connect 2-Semester Access Card for Fundamental Accounting Principles

Ch. 16 - Prob. 1DQ Ch. 16 - Prob. 2DQ Ch. 16 - Prob. 3DQ Ch. 16 - Prob. 4DQ Ch. 16 - Prob. 5DQ Ch. 16 - Prob. 6DQ Ch. 16 - Prob. 7DQ Ch. 16 - Prob. 8DQ Ch. 16 - Prob. 9DQ Ch. 16 - Prob. 10DQ

Ch. 16 - Prob. 11DQ Ch. 16 - Prob. 12DQ Ch. 16 - Prob. 13DQ Ch. 16 - Prob. 14DQ Ch. 16 - Prob. 15DQ Ch. 16 - Prob. 1QS Ch. 16 - Prob. 2QS Ch. 16 - Prob. 3QS Ch. 16 - Prob. 4QS Ch. 16 - Prob. 5QS Ch. 16 - Prob. 6QS Ch. 16 - Prob. 7QS Ch. 16 - Prob. 8QS Ch. 16 - Prob. 9QS Ch. 16 - Prob. 10QS Ch. 16 - Prob. 11QS Ch. 16 - Prob. 12QS Ch. 16 - Prob. 13QS Ch. 16 - Prob. 14QS Ch. 16 - Prob. 15QS Ch. 16 - Prob. 16QS Ch. 16 - Prob. 17QS Ch. 16 - Prob. 18QS Ch. 16 - Prob. 19QS Ch. 16 - Prob. 20QS Ch. 16 - Prob. 1E Ch. 16 - Prob. 2E Ch. 16 - Prob. 3E Ch. 16 - Prob. 4E Ch. 16 - Prob. 5E Ch. 16 - Prob. 6E Ch. 16 - Prob. 7E Ch. 16 - Prob. 8E Ch. 16 - Peugeot S.A. reports the following financial...Ch. 16 - Prob. 10E Ch. 16 - Prob. 11E Ch. 16 - Prob. 12E Ch. 16 - Prob. 13E Ch. 16 - Prob. 14E Ch. 16 - Prob. 15E Ch. 16 - Prob. 16E Ch. 16 - Prob. 17E Ch. 16 - Prob. 18E Ch. 16 - Prob. 1APSA Ch. 16 - Prob. 2APSA Ch. 16 - Prob. 3APSA Ch. 16 - Prob. 4APSA Ch. 16 - Prob. 5APSA Ch. 16 - Prob. 6APSA Ch. 16 - Prob. 7APSA Ch. 16 - Prob. 8APSA Ch. 16 - Prob. 1BPSB Ch. 16 - Prob. 2BPSB Ch. 16 - Prob. 3BPSB Ch. 16 - Prob. 4BPSB Ch. 16 - Prob. 5BPSB Ch. 16 - Prob. 6BPSB Ch. 16 - Prob. 7BPSB Ch. 16 - Prob. 8BPSB Ch. 16 - Prob. 16SP Ch. 16 - Prob. 1GLP Ch. 16 - Prob. 2GLP Ch. 16 - Prob. 3GLP Ch. 16 - Prob. 1BTN Ch. 16 - Prob. 2BTN Ch. 16 - Prob. 3BTN Ch. 16 - Prob. 4BTN Ch. 16 - Prob. 5BTN Ch. 16 - Prob. 6BTN Ch. 16 - Prob. 7BTN Ch. 16 - Prob. 8BTN Ch. 16 - Prob. 9BTN Ch. 16 - Prob. 10BTN

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