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Chapter 19 The Statement of Cash Flows Case Study . CS-1 LO Granite Surfaces specializes in making granite countertops. A new accounting clerk has compiled the following Information to prepare the statement of cash flows for the year ended December 31, 2018 Net Income for the year was 5114.140. Depreciation expense was $15.300 Equipment was sold for a gain of $16.000. Cash proceeds from the sale were $36.000 Equipment was purchased for $250,000 Dividends of $50,000 were paid. Accounts receivable increased by $31400. Merchandise inventory decreased by 538,700 Accounts payable increased by $41,100. Notes payable increased by 555,000. Stock was sold for $50,000 (also its book value). Cash balance on January 1, 2018 was 5114,800. Cash balance on December 31, 2018 was $117,640. The statement of cash flows the accounting clerk prepared is shown below. Granite Surfaces Statement of Cash Flows For the Year Ended December 31, 2018 Cash Flow from Operating Activities Net Income $114,140 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities Depreciation Expense 15,300 Changes in Operating Assets and Liabilities Increase in Accounts Receivable 31.400 Decrease in Merchandise Inventory (38,7001 Increase in Accounts Payable 41,100 Sale of Equipment 36.000 Purchase of Equipment 250.000 Net Cash Provided (Used) by Operating Activities 1550,760) 55.000 55,000 Cash Flow from Investing Activities Proceeds from Notes Payable Net Cash Provided (Used) by Investing Activities Cash Flow from Financing Activities Payment of Cash Dividend Proceeds from Issuance of Common Stock Net Cash Provided (Used) by Financing Activities Net Increase (Decrease in Cash Cash at the Beginning of the Year Cash at the End of the Year 50.000 50.000 4.240 114.800 $119049 780 4 5 6 Part a- Identify the problems with the Statement of Cash Flows that the accounting clerk prepared. 7 8 1. 9 2. 3 10 11 millilo 12 13 15 Part b - Prepare a corrected Statement of Cash Flows 16 17 18 19 Granite Surfaces Statement of Cash Flows - corrected For the month ended 12/31/2018 zo Cash Flow from Operating Activities: 21 22 Adjustments to Reconcile Net Income to Net Cash: 23 24 25 Changes in Operating Assets and Liabilities: 26 27 28 Sheet1 + 19 For the month ended 12/31/2018 20 Cash Flow from Operating Activities: 21 22 Adjustments to Reconcile Net Income to Net Cash: 23 24 25 Changes in Operating Assets and Liabilities: 26 27 0 28 29 Net Cash Provided (Used) by Operating Activities 30 31 Cash Flow from Investing Activities: 32 33 0 34 Net Cash Provided (Used) by Investing Activities 35 36 Cash Flow from Financing Activities: 37 38 39 40 Net Cash Provided (Used) by Financing Activities 0 41 0 42 Net Increase (Decrease) in Cash 43 Cash at the Beginning of the Year 44 Cash at the End of the Year 114,800 114,800 45 46 47
