Instructions: Complete the cash flow statement
1. Using a comparative balance sheet (two years) find the differences in the accounts
2. Make sure you are finding the change from the old year to the new year as far as increases or decreases are concerned
3. The change in cash will be the answer to the problem.
I will be providing you with the question and the outline you need to follow to complete the question. Two documents provided will be the question and two documents will be the outline you need to follow.
Cash Flow Outline Cash flow from operating activities Net Income Adjustments Add back depreciation expense Add back Amortization expense Less gain on sale Add loss on sale Increase in current asset ( ) Decrease in current asset + Increase in current Liability + Decrease in current liability ( ) Total Adjustments Cash flow from operating activities 'I Exceptions - never ever cash in current assets Exceptions -no dividends or any current nancing in current liabilities Cash Flow from investing activities All long term assets Sale of long-term asset-cash received + Includes any gain or loss Purchase of long term asset-cash paid ( ) Cash flow from investing activities 2 Cash flow from nancing activities Dividends paid ( ) Money borrowed + Money borrowed + Payments on money borrowed ( ) Principal only Sale of stock (cash received) + Purchase of treasury Stock ( ) Cash flow from nancing activities 3 Change in cash (1+2+3) Should equal the change on the balance sheet Beginning cash (from balance sheet) Ending cash Change + beginning should equal ending on balance sheet) Never ever cash or retained earnings! Problem #6 Hamilton Company Comparative Balance Sheets December 31, 2013 and December 13, 2014 Assets 2013 2014 Difference Cash 611,200 515,200 (96,000) Accounts Receivable 1,507,600 1,467,600 (40,000) Inventory 1,610,000 1,930,000 320,000 Prepaid Expenses 53,600 29,600 (24,000) Long term investments 880,000 880,000 Land 642,400 722,400 80,000 Building 1,840,000 2,400,000 560,000 Accumulated Depr - Building (320,000) (480,000) (160,000) Equipment 960,000 960,000 Accumulated Depr - Equipment (112,000) (232,000) (120,000) Patents 80,000 40,000 (40,000) Total Assets 7,752,800 8,232,800 480,000 Liabilities & Stockholder's Equity Accounts Payable 1,331,600 951,600 (380,000) Notes Payable (Current) 320,000 80,000 (240,000) Accrued Liabilities 31,600 11,600 (20,000) Mortgage Payable 1,600,000 2,160,000 560,000 Bonds Payable 1,520,000 2,000,000 480,000 Common Stock 510 par value 2,600,000 2,600,000 Additional paid in capital 160,000 160,000 Retained Earnings 389,600 509,600 120,000 Treasury Stock (200,000) (240,000) (40,000) Total Liabilities & S/E 7,752,800 8,232,800 480,000 Additional information: 1. Net income $192,000 2. Building depreciation $160,000 3. Equipment depreciation $120,000 Problem #6 4. Sold investments for $300,000 on which there was a gain of $68,000 5. Paid $80,000 on the mortgage 6. Patent amortization $40,000 7. Issued $480,000 of long term bonds 8. Issued a note payable $120,000 9. Repaid a note in the amount of $360,000 10. Land and building purchased with a mortgage $640,000 12. Paid dividends of $72,000 13. Purchased investments $232,000 14. Purchased treasury stock in the amount of $40,000
