Cash Accounts Receivable Allowance BD Inventory PPD Rent PPD Insurance Supplies
ID: 2509282 • Letter: C
Question
Cash
Accounts Receivable
Allowance BD
Inventory
PPD Rent
PPD Insurance
Supplies
Securities
Equiptment
AD Equipment
Del. Truck
A/D Delivery Truck
Land
Accounts Payable
Salaries Payable
Payroll Taxes Payable
Interest Payable
Dividends Payable
Income Tax Payable
Note Payable
Bond Payable
Common Stock
APIC
Unearned Compensation
Treasury Stock
RE
Dividends
Income Summary
Sales
Sales R & Allow
Sales Disc
COGS
Compensation Exp
Salaries Exp
Rent Exp
Bad Dept Exp
Payroll Tax Exp
Advertisting
Insurance Exp
Supplies Exp
Depreciation Exp
Utilities Exp
Interest Exp
Income Tax Exp
Realized G/L
Unrealized G/L
Misc Exp
Bonds Discount Amortised
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I didn’t include the account amounts but given these accounts how would you set up the cash flows statement?
Explanation / Answer
Statement of Cash flows for the period ending xx/xx/xxxx (Indirect Method)
Operating Activities
Net Income (a)
Adjustments to reconcile Net Income to Net Cash provided by operations:
Accounts receivable
Allowance BD
Inventory
PPD Rent
PPD Insurance
Supplies
Securities
Accounts Payable
Salaries Payable
Payroll taxes payable
Interest payable
Income tax payable
Depreciation
Amortization
Realized gains
Bonds Discount amortized
Total Adjustments to reconcile Net Income to Net Cash provided by operations (b):
Net cash provided by operating activities (a+b)
INVESTING ACTIVITIES:
Equipment
Delivery Truck
Land
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES:
Note Payable
Bond Payable
Common Stock
APIC
Dividends
Unearned Compensation
Treasury Stock
Net cash provided by Financing Activities
Net cash increase (Decrease) for the period
Cash at beginning of the period
Cash at end of the period
Notes:
The above is the format for Statement of cash flows prepared under Indirect method
Dividends payable - are not included as they are just a reduction from the retained earnings, This is a non cash transaction which shifts an amount from equity section to current liabilities
Unrealized gains/ losses are not shown on the statement of cash flows, as they are a part of Other comprehensive Income, shown under Owners equity section on balance sheet. There is no impact on cash flows
In operating activities, the adjustments to reconcile Net Income to Net Cash provided by operations is shown based on the following:
Add: Decrease in Current assets and Increase in current liabilities
Less: Increase in current assets and decrease in current liabilities