Hello, I did this! Correct or Wrong? plz help if there are some mistake. Thank y
ID: 2812288 • Letter: H
Question
Hello, I did this! Correct or Wrong? plz help if there are some mistake. Thank you
Statement of Cash Flows Spreadsheet Example 4 Module II Name Date Account Balance Change Classification Account 2015 2016 [(3)2)]Source 10 Check () below as ASSETS 12 13 Cash 14 Marketable Securities 15 Accounts Receivable either source or use $3,700$4,200 281 3.500 3.400 55,689 $500 (61) NIA NIA 342 3,2003 300 301 3,099 51,785 17 Gross Fixed Assets 18 Less: Accum. Depreciation 19 Intangible Assets 20 21 7,5567,75 195) 186 180 LIABILITIES: 23 Notes Payable 24 Accounts Payable 25 Accruals 26 Long Term Debt $1,200$1,400 3.900 3,622 643 7,000 278 484(159) 0 (500) 6,500 28 STOCKHOLDERS EQUITY: 29 30 Common Stock 31 Paid-in Capital in Excess of Par 32 Retained Earnings 1,0001,200 4.000 38,29142,015 1,000 3,724 3,000 Totals $9,486Explanation / Answer
The following are the mistakes noted into this cash flow statement.
Net income after taxes taken is wrong. We should take the change in retained earnings as net income after taxes. Because this change is actually is the net income for the current year.
We should add back the depreciation & amortization expense to the net income because it is a non cash item and would have been deducted at the time of calculating the net income. So for calculting cash from operating activities, we should add back this item.
All increases in current assets should be deducted and decreases in current assets should be added in operating activities. Marketable securities are current assets.
All increases in current liabilities should be added and decreases in current liabilities should be deducted in operating activities.Notes payable is also a current liability.
Increase in fixed assets expenditure reduces cash from investing activities.
Ending cash balance should be equal to what is given in the balance sheet.
The correct cash flow statement is given below:
Cash from Operating activities:
Net income after taxes $3724
Add: Depreciation and amortization of intangibles $201
Increase in accounts receivable ($300)
Increase in inventories ($301)
Decrease in Marketable securities $61
Increase in accounts payable $278
Increase in notes payable $200
Decrease in accruals ($159)
Net cash provided by operating activities $3704
Cash flows from investing activities
Increase in fixed assets ($3904)
Net cash used in investing activities ($3904)
Cash flows from financing activities
Common stock issued $200
Increase in paid in capital in excess of par $1000
Decrease in long term debt ($500)
Net cash provided by financing activities $700
Sum of the above three activities $500
ADD: Cash in the beginning of the year $3700
Cash at the end of the year $4200
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