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

AutoSave . Off) CH 19 case study TEMPLATE FAP (1).xIsx - Excel Sign in X File Home Insert Page Layout Formulas Data Review View Help 9 Search Share Comments X Cut AutoSum Calibri 11 A" A al Wrap Text General AY O [ Copy Fill Paste BIUVA E Merge & Center $ ~ % 9 00 .00 Conditional Format as Cell Insert Delete Format Sort & Find & Ideas Format Painter Formatting Table Styles Clear Filter ~ Select Clipboard Font Alignment Number Styles Cells Editing Ideas B1 X v fx A B C D E F G H 4 Part a - Identify the problems with the Statement of Cash Flows that the accounting clerk prepared. Continued 6 8 9 10 11 12 13 Part b - Prepare a corrected Statement of Cash Flows 14 15 Granite Surfaces Granite Surfaces 16 Statement of Cash Flows - as prepared Statement of Cash Flows - corrected 17 For the month ended 12/31/2018 For the month ended 12/31/2018 18 Cash Flow from Operating Activities 19 Net Income $ 114,140 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by 20 Operating Activities 21 Depreciation Expense $ 15,300 Changes in Operating Assets and Liabilities 23 Increase in Accounts Receivable $ 31,400 24 Decrease in Merchandise Inventory $ (38,700) 25 Increase in Accounts Payable 41,100 26 Sale of Equipment S 36,000 27 Purchase of Equipment (250,000) 28 Net Cash Provided (Used) by Operating Activities 50,760) 29 Sheet1 + Edit + 100%The Statement of Cash Flows Chapter 19 Required a) Identify the problems with the statement of cash flows that the accounting clerk prepared. bj Prepare a corrected statement of cash flows. 781Chapter 19 The Statement of Cash Flows Case Study CS-1 LO 2 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 $114,140. 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 $31,400. Merchandise inventory decreased by $38,700. Accounts payable increased by $41,100. Notes payable increased by $55,000. Stock was sold for $50,000 (also its book value). Cash balance on January 1, 2018 was $114,800. 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 (38,700) Increase in Accounts Payable 41,100 Sale of Equipment 36,000 Purchase of Equipment (250.000) Net Cash Provided [Used) by Operating Activities ($50,760) Cash Flow from Investing Activities Proceeds from Notes Payable 55,000 Net Cash Provided (Used) by Investing Activities 55,000 Cash Flow from Financing Activities Payment of Cash Dividend (50,000) Proceeds from Issuance of Common Stock 50,000 Net Cash Provided (Used) by Financing Activities Net Increase (Decrease) in Cash 4,240 Cash at the Beginning of the Year 114,800 Cash at the End of the Year $119 040 780AutoSave (. Off ) CH 19 case study TEMPLATE FAP (1).xIsx - Excel Sign in File Home Insert Page Layout Formulas Data Review View Help O Search 15 Share Comments X Cut AutoSum Calibri 11 ~ A" A ab Wrap Text General X E AY O LE Copy Fill Paste BIUSA Merge & Center v Insert Delete Format Ideas $ ~ % 9 Sort & Find & E Format Painter 00 Conditional Format as Cell Formatting Table Styles v Clear Filter ~ Select Clipboard Font Alignment Number Styles Cells Editing deas B1 X vfx s A B C D E F G H 19 Net Income $ 114,140 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by 20 Operating Activities 21 Depreciation Expense $ 15,300 Changes in Operating Assets and Liabilities 23 Increase in Accounts Receivable $ 31,400 Decrease in Merchandise Inventory $ (38,700 25 Increase in Accounts Payable 41,100 26 Sale of Equipment 36,000 27 Purchase of Equipment (250,000) 28 Net Cash Provided (Used) by Operating Activities $ (50,760) 29 30 Cash Flow from Investing Activities 31 Proceeds from Notes Payable S 55,000 32 Net Cash Provided (Used) by Investing Activities S 55,000 33 34 Cash Flow from Financing Activities 35 Payment of Cash Dividend $ (50,000) 36 Proceeds from Issuance of Common Stock 50,000 37 Net Cash Provided (Used) by Financing Activities S 38 39 Net Increase (Decrease) in Cash $ 4,240 Cash at the Beginning of the Year 114,800 41 Cash at the End of the Year 119,040 42 43 Sheet1 + dit + 100%