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Mini Assignment-2 Prepare Cash Flow Statement For Year Ending December 31,2008

The document provides information needed to prepare a cash flow statement for the year ending December 31, 2008. Key events include: purchasing long-term investments for $30,000 cash; purchasing land for $50,000 via a note payable; purchasing equipment for $75,000 cash; selling a machine for $25,000 cash realizing a $5,000 gain; retiring bonds paying $63,000 cash; issuing capital stock for $25,000 cash. The cash flow statement shows cash from operations of $174,000, cash used for investing of $80,000, and cash used for financing of $105,000, resulting in a decrease in cash of $11,000.

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Mohit Manandhar
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63 views8 pages

Mini Assignment-2 Prepare Cash Flow Statement For Year Ending December 31,2008

The document provides information needed to prepare a cash flow statement for the year ending December 31, 2008. Key events include: purchasing long-term investments for $30,000 cash; purchasing land for $50,000 via a note payable; purchasing equipment for $75,000 cash; selling a machine for $25,000 cash realizing a $5,000 gain; retiring bonds paying $63,000 cash; issuing capital stock for $25,000 cash. The cash flow statement shows cash from operations of $174,000, cash used for investing of $80,000, and cash used for financing of $105,000, resulting in a decrease in cash of $11,000.

Uploaded by

Mohit Manandhar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Mini Assignment-2

Prepare Cash Flow Statement for Year Ending December 31,2008

Additional Information:
1. Long-term investments were purchased for $30,000.
2. Land was purchased by issuing a $50,000 note payable.
3. Equipment was purchased for cash
4. A machine with an original cost of $35,000 and a book value of $20,000 was
sold.
5. Bonds with a face value of $60,000 were retired by paying $63,000 in cash.
6. Capital stock was issued in exchange for $25,000 in cash.

Workings

Cash Collection from Customers


Opening Accounts Receivable 57000
Add Sales 670000
Total Receivable 727000
Less Closing Accounts Receivable 63000
Cash Collected 664000

Calculation for Purchase


Opening Inventory 92000
Add Purchase ?
Less Cost of Goods Sold 390000
Closing Inventory 84000
Purchase 382000

Cash Paid To Suppliers


Opening Accounts Payable 31000
Add Purchases 382000
Total Payable 413000
Less Closing Accounts Payable 38000
Cash Paid 375000

Insurance
Opening Prepaid 18000
Insurance 12000
Prepaid Remaining 6000
Closing Prepaid on BS 12000
Cash paid on insurance 6000

Long Term Investment


Opening Long Term Investment 90000
Closing Long Term Investment 120000
Purchase of Investment 30000 by cash

Land
Opening Value Land 100000
Closing Long Term Investment 150000
Purchase of Land 50000 Paid by Issuing Notes Payable

Property & Equipment Accumulated Depreciation


Openi 280000 Opeining 75000
Closin 320000 Closing 100000
40000

Book Value of Machine Sold 20,000


Sold at Gain of 5,000
Cash from Sale of Machine 25,000

Opening NBV 205,000


Add Purchases 75,000 Purchased for Cash
Less NBV of Machinery Sold 20,000
Less Depreciation 40,000 From IncomStatement
Closing NBV 220,000
Equipment purchased for Cash

Opening Salaries and Wages Payable 9,000


Salaries and Wages Current Year 60,000
Total to be paid 69,000
Closing Salaries and Wages Payable 7,000
Salaries and Wages Paid 62,000

Opening Income Tax Payable 5,000


Tax Payable for the year 50,000 From IncomeStatement
Total to be paid 55,000
Closing Income Tax Payable 8,000
Income Tax Paid 47,000

Opening Notes Payable 35,000


Closing Notes Payable 85,000
Notes Payable 50,000 used for payment of land

Opening Bonds Payable 260,000


Closing Notes Payable 200,000
Decrease in Bonds Payable 60,000
Retired by Paying 63,000

Opening Capital 75,000


Closing Capital 100,000
Increase in Capital 25,000 For Cash

Opening Retained Earning 193,000


Closing Retained Earning 246,000
Change in Retained Earning 53,000

Increase in Retained Earning doesnot equal to Profit for the year


Therefore

Opening Retained Earning 193,000


Profit during the year 120,000
Less Dividend 67,000
Closing Retained Earning 246,000

Cash Flow Statement


for the year ending December 31, 2008

Cash Flow From Operating Activities

Cash Collection from Customers 664,000


Cash from Interest 15,000
Cash Paid to Suppliers 375,000
Cash Paid to Employees 62,000
Cash Paid for Taxes 47,000
Cash Paid for Insurance 6,000
Payment of Interest 15,000
Cash Flow From Operating Activities 174,000

Cash Flow From Investing Activities

Purchase of Long Term Investments 30,000


Sale of Machinery 25,000
Purchase of Equipment 75,000
Cash Flow From Investing Activities (80,000)

Cash Flow From Financing Activities


Issuance of new shares 25,000
Payment of Dividend 67,000
Bonds Retired 63,000
Cash Flow From Financing Activities (105,000)

Net Cash Flow (11,000)


Opening Cash Balance 46,000
Closing Cash Balance 35,000

Non-Cash Investing and Financing

Purchase of Land by Issuing Notes 50,000


Prepaid Insurance Account
Op.Prepaid Insurance 18,000 Insurance 12,000
Cash(b/f) 6,000 Closing Prepaid 12,000
24,000 24,000

ing Notes Payable

Depreciation
eStatement

ment of land

Retained Earnings
Details Amount Details Amount
Dividend(b/f) 67000 Op RE 193000
Profit 120000
Cl RE 246000
313000 313000
HINT:
\ (To calculate NBV)
OC of Property and Equipment
less: Accumulated Depn

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