APPLY THE CONCEPTS: Prepare the operating activities section The income statement and comparative balance sheets for Leonardo Inc. can be viewed by clicking on the links below. No depreciable assets were purchased or sold during the period; therefore, the increase in Accumulated Depreciation is due to depreciation expense for the period. Complete the operating activities section of the statement of cash flows. Use a minus sign (-) to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Income Statement Leonardo Inc. Income Statement For the Year Ended December 31, 20Y8 Sales $489,600 254,592 $235,008 Cost of goods sold Gross profit Operating expenses: Depreciation expense Other operating expenses Total operating expenses Income from operations Other revenue and expenses Interest revenue Gain on sale of land Income before taxes Income taxes Net income + Comparative Balance Sheet $5,120 161,344 166,464 $68,544 $960 5,440 $73,984 19,584 $54,400 4,480 - Comparative Balance Sheet Leonardo Inc. Balance Sheets December 31 20Y8 20Y7 Assets $41,600 20,800 145,600 $224,640 $208,000 118,400 177,600 384,800 88,800 $880,640 $800,000 Cash Accounts receivable (net) Inventories Current assets $57,600 14,400 152,640 Note Receivable 271,040 94,080 384,800 93,920 Land Equipment Less: Accumulated depreciation Total assets Liabilities Accounts payable Wages payable Current liabilities Note payable Total liabilities $17,600 35,200 $52,800 123,200 $173,440 $176,000 $8,960 41,280 $50,240 123,200 Stockholders' Equity Common stock Additional paid-in capital Retained earnings Total equity Total liabilities and equity $137,600 $124,800 280,800 218,400 $707,200 $624,000 $880,640 $800,000 306,400 263,200 Leonardo Inc. Statement of Cash Flows For the Year Ended December 31, 20Y8 Cash flows from operating activites Adjustments to net income: APPLY THE CONCEPTS: Prepare the investing activities section Investing Activities Investing activities include inflows and outflows of cash related to noncurrent assets. Additional data related to noncurrent assets and liabilities may need to be collected to correctly calculate the cash flows from investing activities. Inflows of cash from investing activities may include a gain or loss in the sale of a noncurrent asset. Additional information for investing activities: 1. One of Leonardo's suppliers experienced a devastating loss due to a tornado. Leonardo loaned the company $152,640 cash to help restore its operations. The loan is interest-free 2. Leonardo sold one of its parcels of land for $88,000. Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Cash flows from investing activities: Net cash flows from investing activities Financing Activities Financing activities include inflows and outflows of cash from transactions that either generate capital or repay capital provided to the company. As with investing activities, you must review the changes to equity accounts and noncurrent liabilities as well as collect any additional data related to equity accounts and noncurrent liabilities to correctly calculate the cash flows from financing activities. APPLY THE CONCEPTS: Prepare the financing activities section Additional financing activities data 1. On February 1, 20Y8, Leonardo Inc. issued 12,800 shares of its $1 par value stock. The company received the par value for the shares and $25,600 in excess of par value. 2. Leonardo paid dividends of $9,600 to its stockholders on June 30, 20Y8 Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Cash flows from financing activities: Net cash flows om financing activities Feedback Check Mfy work Evaluate each of these financing activities, and determine whether cash is coming in the door or going out of the door. For stock transactions, be sure to determine the total amount of the cash flow Complete the Statement of Cash Flows After determining the cash flows from the operating, investing, and financing activities, the net change in cash can be calculated by totaling the cash flows from each of the activities. The net change in Cash is added to the Cash balance at the beginning of the period. The sum should be equal to the balance in Cash at the end of the year APPLY THE CONCEPTS: Complete the statement of cash flows Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash APPLY THE CONCEPTS: Prepare the operating activities section The income statement and comparative balance sheets for Leonardo Inc. can be viewed by clicking on the links below. No depreciable assets were purchased or sold during the period; therefore, the increase in Accumulated Depreciation is due to depreciation expense for the period. Complete the operating activities section of the statement of cash flows. Use a minus sign (-) to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Income Statement Leonardo Inc. Income Statement For the Year Ended December 31, 20Y8 Sales $489,600 254,592 $235,008 Cost of goods sold Gross profit Operating expenses: Depreciation expense Other operating expenses Total operating expenses Income from operations Other revenue and expenses Interest revenue Gain on sale of land Income before taxes Income taxes Net income + Comparative Balance Sheet $5,120 161,344 166,464 $68,544 $960 5,440 $73,984 19,584 $54,400 4,480 - Comparative Balance Sheet Leonardo Inc. Balance Sheets December 31 20Y8 20Y7 Assets $41,600 20,800 145,600 $224,640 $208,000 118,400 177,600 384,800 88,800 $880,640 $800,000 Cash Accounts receivable (net) Inventories Current assets $57,600 14,400 152,640 Note Receivable 271,040 94,080 384,800 93,920 Land Equipment Less: Accumulated depreciation Total assets Liabilities Accounts payable Wages payable Current liabilities Note payable Total liabilities $17,600 35,200 $52,800 123,200 $173,440 $176,000 $8,960 41,280 $50,240 123,200 Stockholders' Equity Common stock Additional paid-in capital Retained earnings Total equity Total liabilities and equity $137,600 $124,800 280,800 218,400 $707,200 $624,000 $880,640 $800,000 306,400 263,200 Leonardo Inc. Statement of Cash Flows For the Year Ended December 31, 20Y8 Cash flows from operating activites Adjustments to net income: APPLY THE CONCEPTS: Prepare the investing activities section Investing Activities Investing activities include inflows and outflows of cash related to noncurrent assets. Additional data related to noncurrent assets and liabilities may need to be collected to correctly calculate the cash flows from investing activities. Inflows of cash from investing activities may include a gain or loss in the sale of a noncurrent asset. Additional information for investing activities: 1. One of Leonardo's suppliers experienced a devastating loss due to a tornado. Leonardo loaned the company $152,640 cash to help restore its operations. The loan is interest-free 2. Leonardo sold one of its parcels of land for $88,000. Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Cash flows from investing activities: Net cash flows from investing activities Financing Activities Financing activities include inflows and outflows of cash from transactions that either generate capital or repay capital provided to the company. As with investing activities, you must review the changes to equity accounts and noncurrent liabilities as well as collect any additional data related to equity accounts and noncurrent liabilities to correctly calculate the cash flows from financing activities. APPLY THE CONCEPTS: Prepare the financing activities section Additional financing activities data 1. On February 1, 20Y8, Leonardo Inc. issued 12,800 shares of its $1 par value stock. The company received the par value for the shares and $25,600 in excess of par value. 2. Leonardo paid dividends of $9,600 to its stockholders on June 30, 20Y8 Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash. Cash flows from financing activities: Net cash flows om financing activities Feedback Check Mfy work Evaluate each of these financing activities, and determine whether cash is coming in the door or going out of the door. For stock transactions, be sure to determine the total amount of the cash flow Complete the Statement of Cash Flows After determining the cash flows from the operating, investing, and financing activities, the net change in cash can be calculated by totaling the cash flows from each of the activities. The net change in Cash is added to the Cash balance at the beginning of the period. The sum should be equal to the balance in Cash at the end of the year APPLY THE CONCEPTS: Complete the statement of cash flows Use a minus sign () to indicate an outflow of cash. No sign is needed to indicate an inflow of cash