Statement of Cash Flows , Direct Method. Prepare the statement of cash flows under the direct method for Easthoff, Incorporated using the information from P6-13 and the following cash flow information: Description Cash Inflow (Outflow ) Cash received on common stock issue $ 5,700 Cash payments for dividends (4,500) Cash payment for acquisition of property, plant, and equipment (19,400) Cash receipt from the sale of investment securities 12,300 Cash payments for repayment of notes (11,630) P6-13 Statement of Cash Flows, Operating Activities Section. Direct Method . Easthoff, Incorporated provided the following balance sheets and income statement for the current year Prepare the operating activities section of the cash flow statement using the direct method. Accrued expenses relate to Selling, General, and Administrative Expenses. Easthoff, Incorporated Balance Sheet At December 31 Assets Ending Beginning Current Assets Cash $ 7000 $ 3.500 Accounts Receivable 8,500 8,000 Merchandise Inventory 2,300 1,000 Prepaid Expenses 1,700 2,200 Total Current Assets $19,500 $ 17,700 Noncurrent Assets Investments $ 12,000 $24.300 Property, Plant, and Equipment – net 75,000 58,000 Total Noncurrent Assets $ 87,000 $82,300 Total Assets $106,500 $100,000 Liabilities Current Liabilities Accounts Payable $ 4,500 $1,000 Accrued Expenses 9,800 5,120 income Taxes Payable 6.000 4.850 Total Current Liabilities $ 20,300 $ 10,970 Noncurrent Liabilities Notes Payable $31,000 $ 42,630 Total Noncurrent Liabilities 31,000 42,630 Total Liabilities $51,300 $ 53.600 Stockholders' Equity Common Stock, $1 par value $ 10,000 $ 9,000 Additional Paid- in Capital 24,700 20,000 Retained Earnings 20,500 17400 Total Stockholders' Equity $ 55,700 $ 46.400 Total Liabilities and Stockholders' Equity $106,500 $100,000 Easthoff, Incorporated Income Statement For the year ended December 31 Sales $80,085 Cost of Goods Sold 48,051 Gross Profit 32,034 Selling, General, and Administrative Expenses 10,700 Depreciation Expense 2,400 Total Operating Expenses 13,100 Income Before Interest and Taxes 18,934 Interest Expense (4,000) Income Before Tax 14,934 Income Tax Expense (7334) Net Income $ 7600
Statement of Cash Flows , Direct Method. Prepare the statement of cash flows under the direct method for Easthoff, Incorporated using the information from P6-13 and the following cash flow information: Description Cash Inflow (Outflow ) Cash received on common stock issue $ 5,700 Cash payments for dividends (4,500) Cash payment for acquisition of property, plant, and equipment (19,400) Cash receipt from the sale of investment securities 12,300 Cash payments for repayment of notes (11,630) P6-13 Statement of Cash Flows, Operating Activities Section. Direct Method . Easthoff, Incorporated provided the following balance sheets and income statement for the current year Prepare the operating activities section of the cash flow statement using the direct method. Accrued expenses relate to Selling, General, and Administrative Expenses. Easthoff, Incorporated Balance Sheet At December 31 Assets Ending Beginning Current Assets Cash $ 7000 $ 3.500 Accounts Receivable 8,500 8,000 Merchandise Inventory 2,300 1,000 Prepaid Expenses 1,700 2,200 Total Current Assets $19,500 $ 17,700 Noncurrent Assets Investments $ 12,000 $24.300 Property, Plant, and Equipment – net 75,000 58,000 Total Noncurrent Assets $ 87,000 $82,300 Total Assets $106,500 $100,000 Liabilities Current Liabilities Accounts Payable $ 4,500 $1,000 Accrued Expenses 9,800 5,120 income Taxes Payable 6.000 4.850 Total Current Liabilities $ 20,300 $ 10,970 Noncurrent Liabilities Notes Payable $31,000 $ 42,630 Total Noncurrent Liabilities 31,000 42,630 Total Liabilities $51,300 $ 53.600 Stockholders' Equity Common Stock, $1 par value $ 10,000 $ 9,000 Additional Paid- in Capital 24,700 20,000 Retained Earnings 20,500 17400 Total Stockholders' Equity $ 55,700 $ 46.400 Total Liabilities and Stockholders' Equity $106,500 $100,000 Easthoff, Incorporated Income Statement For the year ended December 31 Sales $80,085 Cost of Goods Sold 48,051 Gross Profit 32,034 Selling, General, and Administrative Expenses 10,700 Depreciation Expense 2,400 Total Operating Expenses 13,100 Income Before Interest and Taxes 18,934 Interest Expense (4,000) Income Before Tax 14,934 Income Tax Expense (7334) Net Income $ 7600
Solution Summary: The author explains the cash flow statement under the direct reporting format. Cash can be increased or decreased through operating, investing, and financing activities.
Statement of Cash Flows, Direct Method. Prepare the statement of cash flows under the direct method for Easthoff, Incorporated using the information from P6-13 and the following cash flow information:
Description
Cash Inflow (Outflow)
Cash received on common stock issue
$ 5,700
Cash payments for dividends
(4,500)
Cash payment for acquisition of property, plant, and equipment
(19,400)
Cash receipt from the sale of investment securities
12,300
Cash payments for repayment of notes
(11,630)
P6-13 Statement of Cash Flows, Operating Activities Section. Direct Method. Easthoff, Incorporated provided the following balance sheets and income statement for the current year Prepare the operating activities section of the cash flow statement using the direct method. Accrued expenses relate to Selling, General, and Administrative Expenses.
Easthoff, Incorporated
Balance Sheet
At December 31
Assets
Ending
Beginning
Current Assets
Cash
$ 7000
$ 3.500
Accounts Receivable
8,500
8,000
Merchandise Inventory
2,300
1,000
Prepaid Expenses
1,700
2,200
Total Current Assets
$19,500
$ 17,700
Noncurrent Assets
Investments
$ 12,000
$24.300
Property, Plant, and Equipment – net
75,000
58,000
Total Noncurrent Assets
$ 87,000
$82,300
Total Assets
$106,500
$100,000
Liabilities
Current Liabilities
Accounts Payable
$ 4,500
$1,000
Accrued Expenses
9,800
5,120
income Taxes Payable
6.000
4.850
Total Current Liabilities
$ 20,300
$ 10,970
Noncurrent Liabilities
Notes Payable
$31,000
$ 42,630
Total Noncurrent Liabilities
31,000
42,630
Total Liabilities
$51,300
$ 53.600
Stockholders' Equity
Common Stock, $1 par value
$ 10,000
$ 9,000
Additional Paid- in Capital
24,700
20,000
Retained Earnings
20,500
17400
Total Stockholders' Equity
$ 55,700
$ 46.400
Total Liabilities and Stockholders' Equity
$106,500
$100,000
Easthoff, Incorporated
Income Statement
For the year ended December 31
Sales
$80,085
Cost of Goods Sold
48,051
Gross Profit
32,034
Selling, General, and Administrative Expenses
10,700
Depreciation Expense
2,400
Total Operating Expenses
13,100
Income Before Interest and Taxes
18,934
Interest Expense
(4,000)
Income Before Tax
14,934
Income Tax Expense
(7334)
Net Income
$ 7600
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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