Please answer these there questions with your own words. Thankyou!
1- What is the purpose of a statement of cash flows? How does itdiffer from a balance sheet and an income statement?
2- Net income for the year for Carrie, Inc. was $850,000, butthe statement of cash flows reports that cash provided by operatingactivities was $960,000. What might account for the difference?
3- Differentiate between operating activities, investingactivities, and financing activities.
Please answer these there questions with your own words. Thankyou!
1- What is the purpose of a statement of cash flows? How does itdiffer from a balance sheet and an income statement?
2- Net income for the year for Carrie, Inc. was $850,000, butthe statement of cash flows reports that cash provided by operatingactivities was $960,000. What might account for the difference?
3- Differentiate between operating activities, investingactivities, and financing activities.
Related questions
Charlotte Company's net income last year was $80,000. Changes inthe company's balance sheet accounts for the year appear below: |
| Increases (Decreases) | ||
| Asset andContra-Asset Accounts: | ||
| Cash | $ | 21,500 |
| Accountsreceivable | $ | 18,000 |
| Inventory | $ | (25,000) |
| Prepaidexpenses | $ | 8,000 |
| Long-term investments | $ | 36,000 |
| Property, plant and equipment | $ | 66,000 |
| Accumulated depreciation | $ | 42,000 |
| Liability and EquityAccounts: | ||
| Accountspayable | $ | (25,000) |
| Accruedliabilities | $ | 15,000 |
| Incometaxes payable | $ | 45,000 |
| Bondspayable | $ | (56,000) |
| Commonstock | $ | 26,000 |
| Retainedearnings | $ | 68,500 |
The company did not dispose of any property, plant, andequipment, sell any long-term investments, issue any bonds payable,or repurchase any of its own common stock during the year. Thecompany declared and paid a cash dividend $11,500. |
Required: | |
| a. | Prepare the operating activities section of the company'sstatement of cash flows for the year. (Use the indirect method.)(Amounts to be deducted should be indicated with a minussign. Omit the "$" sign in your response.) |
| Statement of Cash Flows | ||
| Operatingactivities: | ||
| $ | ||
| Adjustments to convert netincome to cash basis: | ||
| $ | |
| Netcash |
| operating activities | $ | |
| b. | Prepare the investing activities section of the company'sstatement of cash flows for the year. (Amounts to bededucted should be indicated with a minus sign. Omit the "$" signin your response.) |
| Statement of Cash Flows | ||
| Investingactivities: | ||
| $ | |
| Netcash |
| investing activities | $ | |
| c. | Prepare the financing activities section of the company'sstatement of cash flows for the year. (Amounts to bededucted should be indicated with a minus sign. Omit the "$" signin your response.) |
| Statement of Cash Flows | ||
| Financingactivities: | ||
| $ |
| Netcash |
| financing activities | $ |
Statement of Cash FlowsâIndirect Method
The comparative balance sheet of Livers Inc. for December 31,20Y3 and 20Y2, is shown as follows:
| Dec. 31, 20Y3 | Dec. 31, 20Y2 | ||||
| Assets | |||||
| Cash | $256,770 | $237,750 | |||
| Accounts receivable (net) | 93,020 | 85,390 | |||
| Inventories | 262,580 | 252,830 | |||
| Investments | 0 | 97,950 | |||
| Land | 134,680 | 0 | |||
| Equipment | 289,710 | 223,520 | |||
| Accumulated depreciationâequipment | (67,830) | (60,280) | |||
| Total assets | $968,930 | $837,160 | |||
| Liabilities and Stockholders'Equity | |||||
| Accounts payable (merchandise creditors) | $175,380 | $164,920 | |||
| Accrued expenses payable (operating expenses) | 17,440 | 21,770 | |||
| Dividends payable | 9,690 | 7,530 | |||
| Common stock, $10 par | 52,320 | 41,020 | |||
| Paid-in capital: Excess of issue price overpar-common stock | 196,690 | 113,850 | |||
| Retained earnings | 517,410 | 488,070 | |||
| Total liabilities and stockholdersâ equity | $968,930 | $837,160 | |||
Additional data obtained from an examination of the accounts inthe ledger for 20Y3 are as follows:
The investments were sold for $114,600 cash.
Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The common stock was issued for cash.
There was a $68,690 credit to Retained Earnings for netincome.
There was a $39,350 debit to Retained Earnings for cashdividends declared.
Required:
Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Use the minus signto indicate cash out flows, cash payments, decreases in cash, orany negative adjustments.
| LiversInc. | ||
| Statement ofCash Flows | ||
| For the YearEnded December 31, 20Y3 | ||
| Cash flows from operating activities: | ||
| $ | ||
| Adjustments to reconcile net income to netcash flow from operating activities: | ||
| Changes in current operating assets andliabilities: | ||
| Net cash flow from operatingactivities | $ | |
| Cash flows from investing activities: | ||
| $ | ||
| Net cash flow used for investingactivities | ||
| Cash flows from financing activities: | ||
| $ | ||
| Net cash flow from financingactivities | ||
| $ | ||
| Cash at the beginning of the year | ||
| Cash at the end of the year | $ | |
