Question
Following is the data and financial information that you will need to answer the questions in the assignment and to ultimately prepare the Cash Flow
Following is the data and financial information that you will need to answer the questions in the assignment and to ultimately prepare the Cash Flow Statement.
Information for XYZ Co.
Account Description | 12/31/2017 | 12/31/2016 |
Assets | ||
Cash & Cash Equivalents | 45,000 | 13,000 |
Accounts Receivable | 91,000 | 88,000 |
Equipment | 139,000 | 22,000 |
Accumulated Depreciation - Equipment | (17,000) | (11,000) |
Total Assets | 258,000 | 112,000 |
Liabilities & Stockholders' Equity | ||
Accounts Payable | 20,000 | 15,000 |
Bonds Payable | 100,000 | 0 |
Common Stock | 100,000 | 80,000 |
Retained Earnings | 38,000 | 17,000 |
Total Liabilities & Stockholders' Equity | 258,000 | 112,000 |
Additional Information
(A) Net income for 2017 was $44,000.
(B) New equipment was purchased in 2017 but none was sold.
(C) Cash dividends of $23,000 were declared and paid in 2017.
(D) $100,000 of equipment was acquired by the issuance of Bonds Payable.
Question 1
Step 1 Prepare a Comparative Balance Sheet and compute the change (increase or decrease) in the account balances during the period. This is your anchor and the Cash Flow Statement will reflect all of these changes either in:
- The cash section (a combination of (a) Operating Activities, (b) Investing Activities, and (c) Financing Activities) or,
- A non-cash section (for Non-Cash Investing and Financing Activities)
Account Description | 12/31/2017 | 12/31/2016 | Increase (Decrease) |
Assets | |||
Cash & Cash Equivalents | 45,000 | 13,000 | |
Accounts Receivable | 91,000 | 88,000 | |
Equipment | 139,000 | 22,000 | |
Accumulated Depreciation - Equipment | (17,000) | (11,000) | |
Total Assets | 258,000 | 112,000 | |
Liabilities & Stockholders' Equity | |||
Accounts Payable | 20,000 | 15,000 | |
Bonds Payable | 100,000 | 0 | |
Common Stock | 100,000 | 80,000 | |
Retained Earnings | 38,000 | 17,000 | |
Total Liabilities & Stockholders' Equity | 258,000 | 112,000 |
Question 2
Step 2 The ultimate goal of the Cash Flow Statement is to determine and detail why Cash and Cash Equivalents during the period ___________________ by $___________________.
Step 3 Prepare the Operating Activities section of the Cash Flow Statement.
Description | Amount |
Net Cash Provided By (Used In) Operating Activities |
Step 4 Prepare the Investing Activities section of the Cash Flow Statement. Investing Activities represent either amounts that a company invests in:
(a) Itself (i.e., capital expenditures or purchases for fixed assets, purchasing another business) or the disposals/sales of fixed assets or a business, and
(b) The stock or bonds of other entities (i.e., purchasing an investment in the common stock or bonds of another company) or disposing of such investments
Description | Amount |
Net Cash Provided By (Used In) Investing Activities |
Step 5 Complete the Financing Activities section of the Cash Flow Statement. Financing Activities represent either amounts that:
(a) Are received from owners (i.e., capital contributions from owners or proceeds from sale of the companys stocks or bonds to 3rd parties), or distributions of cash back to owners (i.e., dividends paid to owners)
(b) A company borrows from a bank or other lender, and the principal payments made by the company to repay the loans (interest paid by the company is charged to interest expense which is a reduction of Net Income in the Operating Activities section)
Description | Amount |
Net Cash Provided By (Used In) Financing Activities |
Step 6 Determine if there are any Non-Cash Investing and/or Financing Activities". Non-Cash Investing and/or Financing Activities represent transactions where there was some investing and financing transaction that did not require any outlay of cash. So with a Non-Cash Investing and/or Financing Activity, some long-term asset, long-term liability, or stockholders equity is impacted through a non-cash transaction.
These non-cash transactions get reported as Non-Cash Investing and/or Financing Activities below the body of the cash transactions section of the Cash Flow Statement.
Examples of Non-Cash Investing and/or Financing Activities are:
(a) A company acquiring property or equipment by issuing some of its stock or bonds,
(b) Issuing stock (rather than paying cash) to pay off some of the companys debt.
Description |
Step 7 Prepare the Cash Flow Statement for XYZ Co. for the Year Ended 12/31/17.
Cash Flows From Operating Activities | |
Net Cash Provided By (Used In) Operating Activities | |
Cash Flows From Investing Activities | |
Net Cash Provided By (Used In) Investing Activities | |
Cash Flows From Financing Activities | |
Net Cash Provided By (Used In) Financing Activities | |
Net Increase (Decrease) In Cash & Cash Equivalents | |
Cash & Cash Equivalents - Beginning Of Year | |
Cash & Cash Equivalents - End Of Year | |
Non-Cash Investing & Financing Activities | |
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