
Concept explainers
(1)
Financial statement:
A financial statement is the complete record of financial transactions that take place in a company at a particular point of time. It provides important financial information regardingthe assets, liabilities, revenues and expenses of the company to its internal and external users. It helps them to know the exact financial position of the company.
To calculate: the missing amounts.
(1)

Explanation of Solution
Calculate the missing amounts.
Cash Balance – 2015:
Calculate the purchase:
Calculate Inventory – 2015:
Calculate total assets:
Total Assets | 2016 ($) | 2015 ($) |
Cash | 145 | 59 |
Accounts Receivable | 93 | 84 |
Investments | - | 50 |
Inventory | 60 | 52 |
Property, plant, and equipment | 150 | 150 |
Less: Accumulated Depreciation | (65) | (55) |
Total Assets | 383 | 340 |
Table (1)
Calculate Income tax payable – 2015
Calculate
Calculate total liabilities and shareholders’ equity:
Total Liabilities and |
2016($) | 2015($) |
Accounts payable to suppliers | 40 | 30 |
Payables for selling and administrative expenses | 9 | 9 |
Income taxes payable | 22 | 24 |
Common stock | 240 | 230 |
Retained earnings | 72 | 47 |
Total Assets | 383 | 340 |
Table (2)
(2)
To prepare: Operating activities section of Corporation G’s
(2)

Explanation of Solution
Prepare the operating activities of Corporation G for 2016 statement of cash flows using indirect method.
Corporation G | ||
Statement of Cash Flows - Indirect Method (Partial) | ||
For the Year 2016 | ||
Particulars | Amount ($) | Amount ($) |
Cash flows from Operating activities: | ||
Net income | 28 | |
Adjustments for noncash effects: | ||
10 | ||
Gain on sale of investments | (15) | |
Changes in operating assets and liabilities | ||
Increase in accounts receivable(1) | (9) | |
Increase in inventory(2) | (8) | |
Increase in accounts payable(3) | 10 | |
Decrease in income taxes payable(4) | (2) | (14) |
Net cash flows from operating activities | $14 |
Table (3)
Working note:
Determine changes of assets and liabilities.
Schedule in the Change of Assets and Liabilities | ||||
Details | Amount ($ in millions) | Adjustment in Operating Activities | ||
Accounts | 2016 | 2015 | Increase/ | |
(Decrease) | ||||
Accounts receivable | 93 | 84 | 9 | Less |
Inventory | 60 | 52 | 8 | Less |
Accounts Payable | 40 | 30 | 10 | Add |
Income Tax Payable | 22 | 24 | (2) | Less |
Table (4)
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Chapter 4 Solutions
Intermediate Accounting w/ Annual Report; Connect Access Card
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