Please calculate
There are no acquisitions and dispositions of businesses during the year. There were no other comprehensive items during the year. All changes in deferred tax assets and liabilities appear as deferred tax expense on the income statement. You have to prepare the cash flow statement. You can do it your way, or you can follow the steps below: 1. Compute the cash balance for years 1 and 2. 2. The total change in accounts is given in the "change" column. 3. Change in cash = - Change in assets + Changes in contra-assets, liabilities, and equity. This formula is already entered for the change in cash in the ICF, FCF, and OCF columns. 4. ICF1: Identify changes in non-cash accounts due to purchase of PP&E. You have to use the supplemental information provided at the bottom of the balance sheet. 5. ICF2: Identify changes in non-cash accounts due to sale of PP&E. You have to use the supplemental information provided at the bottom of the balance sheet. 6. FCF1: Identify changes in non-cash accounts due to borrowings. You have to use the supplemental information provided at the bottom of the balance sheet. 7. FCF2: Identify changes in non-cash accounts due to capital contributions. You have to use the supplemental information provided at the bottom of the balance sheet. 8. FCF3: Identify changes in non-cash accounts due to principal repaid. You have to use the supplemental information provided at the bottom of the balance sheet. 9. FCF4: Identify changes in non-cash accounts due to stock buyback. You have to use the supplemental information provided at the bottom of the balance sheet. 10. FCF5: Identify changes in non-cash accounts due to dividends. You have to use the supplemental information provided at the bottom of the balance sheet. 11. Subtract changes due to investing and financing activities from the total change to arrive at changes due to operating activities. This formula is already entered in the OCF column. 12. Use this information to prepare the cash flow statement. 13. If your computations have errors, then the check cells will not be blank. 14. Direct cash flows: Now you have to think how to adjust each row on the income statement to arrive at corresponding cash flows. 1 Y2 Change ICF1 0.00 1825.00 2134.00 180.00 204.00 800.00 920.00 456.00 552.00 2100.00 2345.00 657.00 768.00 213.00 239.00 ICF2 FCF1 FCF2 FCF3 FCF4 FCF5 OCF 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Balance sheet Cash and cash equivalents Gross receivables Allowance for bad debts: CONTRA Inventories Prepaid advertising Gross PP&E Accumulated depreciation: CONTRA Deferred tax assets = Total assets Accounts payable to suppliers of inventory Salaries payable Deferred revenues Taxes payable Deferred tax liabilities Accrued interest portion of short-term and long-term debt Principal portion of short-term and long-term debt = Total liabilities Paid in capital Retained earnings = Total equity = Total liabilities + Total equity Check 625.00 715.00 321.00 346.00 145.00 196.00 76.00 88.00 781.00 1171.00 149.00 155.00 1400.00 1621.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 978.00 537.00 1223.00 908.00 0.00 0.00 Y2 9000.00 2756.00 6244.00 926.00 1100.00 156.00 1500.00 2562.00 -145.00 2417.00 93.00 2324.00 765.00 Income statement Sales revenue COGS [Depreciation not included here.] = Gross profit Bad debt expense Depreciation expense Advertising expense Salary expense = Operating income Gain (loss) on sale of PP&E = EBIT Interest expense = Earnings before taxes Current tax expense Deferred tax expense: Change in (DTL - DTA) = Total tax expense = Net income Derivation of deferred tax expense Change in DTL during the year Less: Change in DTA during the year = Def tax expense during year Investing items ICF1: Gross PP&E bought during the year ICF2: Gross PP&E sold during the year ICF2: Accumulated depreciation of PP&E sold during the year Financing items FCF1: Proceeds from new loans FCF2: Capital contributions FCF3: Principal repaid FCF4: Capital distributions FCF5: Dividends Indirect cash flows: You may not need all rows Y2 1598.00 421.00 438.00 Y2 = US GAAP Operating cash flows Check (Capital expenditures) Derivation of proceeds from sale Check Check Check = Proceeds from sale = US GAAP Investing cash flows Proceeds from new loans Capital contributions Principal (repaid) Capital (distributions) (Dividends) = US GAAP Financing cash flows = Net cash flows Direct cash flows Check Check Check Check Check Check Y2 = Cash received from customers = Cash (paid) to suppliers = Cash (paid) for advertising = Cash (paid) for salaries = Cash (paid) for interest = Cash (paid) for taxes = Operating cash flows Check: Direct - Indirect = 0 Check Cash flows data Year 2 (TWO) Deferred tax expense: Change in (DTL-DTA) Gross PP&E sold during the year Accumulated depreciation of PP&E sold during the year US GAAP Operating cash flow (Capital expenditures): Put minus sign in front of outflows Proceeds from sale Principal (repaid): Put minus sign in front of outflows Capital (distributions): Put minus sign in front of outflows (Dividends): Put minus sign in front of outflows Cash received from customers Cash (paid) to suppliers: Put minus sign in front of outflows Cash (paid) for advertising: Put minus sign in front of outflows Cash (paid) for salaries: Put minus sign in front of outflows Cash (paid) for interest: Put minus sign in front of outflows Cash (paid) for taxes: Put minus sign in front of outflows There are no acquisitions and dispositions of businesses during the year. There were no other comprehensive items during the year. All changes in deferred tax assets and liabilities appear as deferred tax expense on the income statement. You have to prepare the cash flow statement. You can do it your way, or you can follow the steps below: 1. Compute the cash balance for years 1 and 2. 2. The total change in accounts is given in the "change" column. 3. Change in cash = - Change in assets + Changes in contra-assets, liabilities, and equity. This formula is already entered for the change in cash in the ICF, FCF, and OCF columns. 4. ICF1: Identify changes in non-cash accounts due to purchase of PP&E. You have to use the supplemental information provided at the bottom of the balance sheet. 5. ICF2: Identify changes in non-cash accounts due to sale of PP&E. You have to use the supplemental information provided at the bottom of the balance sheet. 6. FCF1: Identify changes in non-cash accounts due to borrowings. You have to use the supplemental information provided at the bottom of the balance sheet. 7. FCF2: Identify changes in non-cash accounts due to capital contributions. You have to use the supplemental information provided at the bottom of the balance sheet. 8. FCF3: Identify changes in non-cash accounts due to principal repaid. You have to use the supplemental information provided at the bottom of the balance sheet. 9. FCF4: Identify changes in non-cash accounts due to stock buyback. You have to use the supplemental information provided at the bottom of the balance sheet. 10. FCF5: Identify changes in non-cash accounts due to dividends. You have to use the supplemental information provided at the bottom of the balance sheet. 11. Subtract changes due to investing and financing activities from the total change to arrive at changes due to operating activities. This formula is already entered in the OCF column. 12. Use this information to prepare the cash flow statement. 13. If your computations have errors, then the check cells will not be blank. 14. Direct cash flows: Now you have to think how to adjust each row on the income statement to arrive at corresponding cash flows. 1 Y2 Change ICF1 0.00 1825.00 2134.00 180.00 204.00 800.00 920.00 456.00 552.00 2100.00 2345.00 657.00 768.00 213.00 239.00 ICF2 FCF1 FCF2 FCF3 FCF4 FCF5 OCF 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Balance sheet Cash and cash equivalents Gross receivables Allowance for bad debts: CONTRA Inventories Prepaid advertising Gross PP&E Accumulated depreciation: CONTRA Deferred tax assets = Total assets Accounts payable to suppliers of inventory Salaries payable Deferred revenues Taxes payable Deferred tax liabilities Accrued interest portion of short-term and long-term debt Principal portion of short-term and long-term debt = Total liabilities Paid in capital Retained earnings = Total equity = Total liabilities + Total equity Check 625.00 715.00 321.00 346.00 145.00 196.00 76.00 88.00 781.00 1171.00 149.00 155.00 1400.00 1621.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 978.00 537.00 1223.00 908.00 0.00 0.00 Y2 9000.00 2756.00 6244.00 926.00 1100.00 156.00 1500.00 2562.00 -145.00 2417.00 93.00 2324.00 765.00 Income statement Sales revenue COGS [Depreciation not included here.] = Gross profit Bad debt expense Depreciation expense Advertising expense Salary expense = Operating income Gain (loss) on sale of PP&E = EBIT Interest expense = Earnings before taxes Current tax expense Deferred tax expense: Change in (DTL - DTA) = Total tax expense = Net income Derivation of deferred tax expense Change in DTL during the year Less: Change in DTA during the year = Def tax expense during year Investing items ICF1: Gross PP&E bought during the year ICF2: Gross PP&E sold during the year ICF2: Accumulated depreciation of PP&E sold during the year Financing items FCF1: Proceeds from new loans FCF2: Capital contributions FCF3: Principal repaid FCF4: Capital distributions FCF5: Dividends Indirect cash flows: You may not need all rows Y2 1598.00 421.00 438.00 Y2 = US GAAP Operating cash flows Check (Capital expenditures) Derivation of proceeds from sale Check Check Check = Proceeds from sale = US GAAP Investing cash flows Proceeds from new loans Capital contributions Principal (repaid) Capital (distributions) (Dividends) = US GAAP Financing cash flows = Net cash flows Direct cash flows Check Check Check Check Check Check Y2 = Cash received from customers = Cash (paid) to suppliers = Cash (paid) for advertising = Cash (paid) for salaries = Cash (paid) for interest = Cash (paid) for taxes = Operating cash flows Check: Direct - Indirect = 0 Check Cash flows data Year 2 (TWO) Deferred tax expense: Change in (DTL-DTA) Gross PP&E sold during the year Accumulated depreciation of PP&E sold during the year US GAAP Operating cash flow (Capital expenditures): Put minus sign in front of outflows Proceeds from sale Principal (repaid): Put minus sign in front of outflows Capital (distributions): Put minus sign in front of outflows (Dividends): Put minus sign in front of outflows Cash received from customers Cash (paid) to suppliers: Put minus sign in front of outflows Cash (paid) for advertising: Put minus sign in front of outflows Cash (paid) for salaries: Put minus sign in front of outflows Cash (paid) for interest: Put minus sign in front of outflows Cash (paid) for taxes: Put minus sign in front of outflows
