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IE 241 Exercise - Statement of Cash Flows: XYZ Corporation Comparative Balance Sheets As of End of Years 2021 and 2022

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13 views4 pages

IE 241 Exercise - Statement of Cash Flows: XYZ Corporation Comparative Balance Sheets As of End of Years 2021 and 2022

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mehmetfaruk1981
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1

IE 241
Exercise - Statement of Cash Flows

Below you will find the financial reports of the XYZ Corporation. Using the given reports, prepare a statement of cash
flows.

XYZ Corporation Comparative Balance Sheets as of end of years 2021 and 2022

2022 2021 Change

Assets
Current assets
Cash $46,000 $15,000 $31,000 Increase
A/R 47,000 55,000 (8,000) Decrease
Inventory 144,000 110,000 34,000 Increase
Prepaid Expenses 1,000 5,000 (4,000) Decrease
Total Current Assets $238,000 $185,000 $53,000

Investments $115,000 $127,000 $(12,000) Decrease


Plant Assets
Plant assets $715,000 $505,000 $210,000 Increase
Accumulated Depreciation (103,000) (68,000) (35,000) Increase
Total Plant assets $612,000 $437,000 $175,000
Total Assets $965,000 $749,000 $216,000

Liabilities
Current Liabilities
A/P $50,000 $43,000 $7,000 Increase
Accrued Liabilities 12,000 9,000 3,000 Increase
Income Taxes Payable 3,000 5,000 (2,000) Decrease
Total Current Liabilities $65,000 $57,000 $8,000

Long-Term Liabilities
Notes Payable $295,000 $245,000 $50,000 Increase
Total Liabilities $360,000 $302,000 $58,000

Stockholders' Equity
Common Stock, $5 par value $276,000 $200,000 $76,000 Increase
Paid in Capital 189,000 115,000 74,000 Increase
Retained Earnings 140,000 132,000 8,000 Increase
Total Stockholders' Equity $605,000 $447,000 $158,000

Total Equities $965,000 $749,000 $216,000


2

XYZ Corporation Income Statement for the Year Ended December 31,2022

Sales $698,000
Cost of Goods Sold 520,000
Gross Margin from Sales $178,000

Operating Expenses (including depreciation expense


of $37,000) 147,000

Operating Income $31,000


Other Income (Expenses)
Interest Expense $(23,000)
Interest Income 6,000
Gain on Sale of Investments 12,000
Loss of Sale of Plant assets (3,000) (8,000)
Income Before Taxes $23,000
Income Taxes 7,000
Net Income $16,000

Other transactions affecting noncurrent accounts during 2022 are:

1. Purchased investments on the amount of $78,000.


2. Sold investments for $102,000, These investments cost $90,000.
3. Purchased plant assets in the amount of $120,000.
4. Sold plant assets that cost $10,000 with accumulated depreciation of $2,000 for $5,000.
5. Purchased plant assets (non-cash) by a long-term loan (from the bank) of $100,000.
6. Repaid $50,000 of the long-term loans.
7. Issued 15,200 shares of $5 par value common stock for $150,000.
8. Paid cash dividends in the amount of $8,000.
3

Indirect Method

XYZ Corporation Statement of Cash Flows for the Year Ended December 31, 2022
(in thousands of dollars)

Cash Flows from Operating Activities

Net Income
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities
Depreciation $
Gain on Sale of Investments
Loss on Sale of Plant Assets
Decrease in A/R
Increase in Inventory
Decrease in prepaid Expenses
Increase in Accounts Payable
Increase in Accrued Liabilities
Decrease in Income Taxes Payable
Net Cash Flows from Operating Expenses $30

Cash Flows from Investing Activities

Purchase of Investments
Sale of Investments
Purchase of Plant Assets
Sale of Plant assets
Net Cash Flows from Investing Activities (91)

Cash Flows from Financing Activities


Repayment of long-term debt
Issue of Common Stock
Dividends Paid
Net Cash Flows from Financing Activities 92

Net Increase (Decrease) in Cash $31


Cash at Beginning of Year 15
Cash at End of Year $46
4

Direct Method

XYZ Corporation Statement of Cash Flows for the Year Ended December 31, 2022
(in thousands of Dollars)

Cash Flows from Operating Activities

Cash Receipts from sales


Interest Received
Cash Payments for purchases
Operating Expenses
Interest Payments
Income Taxes
Net Cash Flows from Operating Expenses $30
Cash Flows from Investing Activities

Purchase of Investments
Sale of Investments
Purchase of Plant Assets
Sale of Plant assets
Net Cash Flows from Investing Activities (91)

Cash Flows from Financing Activities


Repayment of long-term debt
Issue of Common Stock
Dividends Paid
Net Cash Flows from Financing Activities 92

Net Increase (Decrease) in Cash $31


Cash at Beginning of Year 15
Cash at End of Year $46

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