Explanation Statement of cash flows: Cash flow statement reports all the cash transactions which are responsible for inflow and outflow of cash. The results of these transactions are reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Operating activities: Operating activities include cash inflows and outflows from business operations. Investing activities: Investing activities include cash inflows and cash outflows from purchase and sale of land, equipment, or investments. Financing activities: Financing activities includes cash inflows and outflows from issuance of common stock and debt, and payment of debt and dividends. Visual inspection method: Visual inspection method is a process of reviewing a company’s financial statement and prepares cash flow statement without using a spreadsheet. This method is used when the company’s financial statement is simple and the relationship between changes in accounts can be easily analyzed. Prepare cash flow statement using visual inspection method: W Company Statement of cash flow for the year ended December 31, 2016 Particulars Amount($) Amount($) Operating Activities: Cash inflows: Collections from customers (working note A) $60,300 Cash inflow from operating activities 60,300 Cash outflows: Payments to suppliers (working note B) 36,000 Payments to employees (working note C) 16,400 Payments of income taxes (working note D) 2,300 Cash outflows for operating activities (54,700) Net cash provided by operating activities 5,600 Investing Activities: Proceeds from sale of land $1,900 Payment for purchase of equipment (10,400) Net cash used for investing activities $(8,500) Financing Activities: Proceeds from issuance of common stock 9,000 Payment of dividends (4,000) Net cash provided by financing activities $5,000 Net increase in cash $2,100 Cash on January 1, 2016 17,000 Cash on December 31,2016 $19,100 Table (1) Working note A: Calculate collections from customers. Sales revenue { + Decrease accounts receivable Or - Increase in accounts receivable +Increase in deferred revenue Or -Decrease in deferred revenue } = Collections from customers Collections from customers = ( Sales - increase in accounts receivable ) = ( $69,000 - $8,700) = $ 60 , 300 Working note B: Calculate Payments to suppliers

2nd Edition

ISBN: 9781305727557

Author: PAGACH

Publisher: YUZU

See similar textbooks

Concept explainers

Reporting Cash Flows

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

Videos

Question

Chapter 21, Problem 21E

To determine

Prepare cash flow statement under visual inspection method for W company.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 21, Problem 20E

Chapter 21, Problem 22E

Students have asked these similar questions

answer plz

Answer

General accounting

Chapter 21 Solutions

EBK INTERMEDIATE ACCOUNTING: REPORTING

Ch. 21 - What information does the statement of cash flows...Ch. 21 - Briefly describe the three types of activities a...Ch. 21 - Thompson Company sold a piece of equipment that...Ch. 21 - Give two examples of a companys (a) cash inflows...Ch. 21 - Prob. 5GI Ch. 21 - Prob. 6GI Ch. 21 - Prob. 7GI Ch. 21 - Prob. 8GI Ch. 21 - Prob. 9GI Ch. 21 - List the three operating cash inflows that a...

Ch. 21 - Prob. 11GI Ch. 21 - Prob. 12GI Ch. 21 - Prob. 13GI Ch. 21 - Prob. 14GI Ch. 21 - Prob. 15GI Ch. 21 - Indicate how a company computes the amount of...Ch. 21 - Prob. 17GI Ch. 21 - Prob. 18GI Ch. 21 - Prob. 19GI Ch. 21 - Which of the following would be considered a cash...Ch. 21 - In a statement of cash flows (indirect method),...Ch. 21 - Prob. 3MC Ch. 21 - The retirement of long-term debt by the issuance...Ch. 21 - Prob. 5MC Ch. 21 - Prob. 6MC Ch. 21 - Prob. 7MC Ch. 21 - Prob. 8MC Ch. 21 - Which of the following need not be disclosed in a...Ch. 21 - Prob. 10MC Ch. 21 - Prob. 1RE Ch. 21 - Prob. 2RE Ch. 21 - Given the following information, convert Cardinal...Ch. 21 - Given the following information, convert Robin...Ch. 21 - In the current year, Harrisburg Corporation had...Ch. 21 - Tifton Co. had the following cash transactions...Ch. 21 - Tifton Co. had the following cash transactions...Ch. 21 - Trenton Corporation has the following items....Ch. 21 - Prob. 9RE Ch. 21 - In the current year, Harrisburg Corporation...Ch. 21 - Providence Company sold equipment for 25,000 cash....Ch. 21 - Annapolis Corporation paid 270,000 to retire bonds...Ch. 21 - Given the following information, compute Lemon...Ch. 21 - Prob. 14RE Ch. 21 - 38619-15.1-1BYL AID: 1825 | 13/07/2019 The ways by...Ch. 21 - Visual Inspection Gordon Companys accounting...Ch. 21 - Prob. 3E Ch. 21 - Prob. 4E Ch. 21 - Prob. 5E Ch. 21 - Prob. 6E Ch. 21 - Prob. 7E Ch. 21 - Prob. 8E Ch. 21 - Prob. 9E Ch. 21 - Prob. 10E Ch. 21 - Prob. 11E Ch. 21 - Fixed Asset Transactions The following is an...Ch. 21 - Prob. 13E Ch. 21 - Prob. 14E Ch. 21 - Prob. 15E Ch. 21 - Prob. 16E Ch. 21 - Prob. 17E Ch. 21 - Prob. 18E Ch. 21 - Prob. 19E Ch. 21 - Prob. 20E Ch. 21 - Prob. 21E Ch. 21 - Prob. 22E Ch. 21 - Classification of Cash Flows A company's statement...Ch. 21 - Prob. 2P Ch. 21 - Prob. 3P Ch. 21 - Prob. 4P Ch. 21 - Prob. 5P Ch. 21 - Spreadsheet and Statement of Cash Flows The...Ch. 21 - Prob. 7P Ch. 21 - Prob. 8P Ch. 21 - Prob. 9P Ch. 21 - Prob. 10P Ch. 21 - Prob. 11P Ch. 21 - Prob. 12P Ch. 21 - Prob. 13P Ch. 21 - Prob. 14P Ch. 21 - Prob. 15P Ch. 21 - Prob. 16P Ch. 21 - Prob. 17P Ch. 21 - Prob. 18P Ch. 21 - Financial Statement Interrelationships Prepare an...Ch. 21 - Statement of Cash Flows A friend of yours is...Ch. 21 - Prob. 3C Ch. 21 - Operating, Investing, and Financing Activities The...Ch. 21 - Prob. 5C Ch. 21 - Spreadsheet Method The spreadsheet method is...Ch. 21 - Prob. 7C Ch. 21 - Inflows and Outflows Alfred Engineering Company is...Ch. 21 - Ethics and Cash Flows You are the accountant for...

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Prepare cash flow statement under visual inspection method for W company.

Solution Summary: The author explains how to prepare a cash flow statement using visual inspection method for W company.

Concept explainers

Videos

Prepare cash flow statement under visual inspection method for W company.

Want to see the full answer?

Chapter 21 Solutions