Create the statement of cash-flow with indirect method Interpret the result of t
ID: 2604276 • Letter: C
Question
Create the statement of cash-flow with indirect method
Interpret the result of the statement of cash flow with percentage
Instruction:
[1] Please use the balance sheet as follows to classify each activity (operating, investing, and financing) from the column of different.
[2] please create a new statement of cash-flow from your classification on balance sheet.
[3] The statement of cash flow will be provided to measure the company’s cash flow situation. Also, you need to interpret the result of your measurement.
Balance sheet
SILVERT CORPORATION
Balance Sheet
December 31
Different
Operating
Investing
Financing
2012
2011
ASSET
Cash
$ 28,000
$ 20,000
$8,000
Receivable (net)
70,000
62,000
$8,000
Other current assets
90,000
73,000
$17,000
Long-term investment
62,000
60,000
$2,000
Plant and equipment (net)
510,000
470,000
$40,000
Total Assets
$ 760,000
$ 685,000
$75,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
$ 75,000
$ 70,000
$5,000
Long-term debt
80,000
90,000
($10,000)
Common stock
330,000
300,000
$30,000
Retained earnings
275,000
225,000
$50,000
Total liabilities and stockholders’ equity
760,000
685,000
$75,000
]2] Create the statement of cash-flow by using the indirect method. Company has net income as starting point of $80,000.
STATEMENT OF CASH FLOW
Operating Activities
Net Income
$ 80,000
Cashflow from Operations
Investing Activities
Cashflow from Investing
Financing Activities
Cashflow from Financing
Balance sheet
SILVERT CORPORATION
Balance Sheet
December 31
Different
Operating
Investing
Financing
2012
2011
ASSET
Cash
$ 28,000
$ 20,000
$8,000
Receivable (net)
70,000
62,000
$8,000
Other current assets
90,000
73,000
$17,000
Long-term investment
62,000
60,000
$2,000
Plant and equipment (net)
510,000
470,000
$40,000
Total Assets
$ 760,000
$ 685,000
$75,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
$ 75,000
$ 70,000
$5,000
Long-term debt
80,000
90,000
($10,000)
Common stock
330,000
300,000
$30,000
Retained earnings
275,000
225,000
$50,000
Total liabilities and stockholders’ equity
760,000
685,000
$75,000
Explanation / Answer
Answer 1. Silvert Corporation Balance Sheet December 31 Difference Operating Investing Financing 2012 2011 Asset Cash 28,000.00 20,000.00 8,000.00 Receivable (Net) 70,000.00 62,000.00 8,000.00 8,000.00 Other Current Assets 90,000.00 73,000.00 17,000.00 17,000.00 Long Term Investment 62,000.00 60,000.00 2,000.00 2,000.00 Plant & Equipment (Net) 510,000.00 470,000.00 40,000.00 40,000.00 Total Assets 760,000.00 685,000.00 Liabilities & Stockholders' Equity Current Liabilities 75,000.00 70,000.00 5,000.00 5,000.00 Long Term Debt 80,000.00 90,000.00 (10,000.00) (10,000.00) Common Stock 330,000.00 300,000.00 30,000.00 30,000.00 Retained Earnings 275,000.00 225,000.00 50,000.00 Total Liabilities & Stockholders' Equity 760,000.00 685,000.00 Answer 2. Silvert Corporation Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2012 Cash Flow from opearating activities: Net Income 80,000 Add/(Less) non cash effects on operating activities Increase in Accounts Receivables (8,000) Increase in Other Current Assets (17,000) Increase in Current Liabilities 5,000 (20,000) Net Cash provided by operating activities 60,000 Cash flow from Investing Activities Purchase of Long Term Investment (2,000) Purchase of Plant & Euipment (net) (40,000) Net Cash used by Investing activities (42,000) Cash Flow from Financing Activities Paymnet of Long Term debt (10,000) Issue of Common Stock 30,000 Cash dividend paid (30,000) Net Cash used by Financing activities (10,000) Net Increase / (Decrease) in Cash 8,000 Cash balance at the beginning - Dec 31, 2011 20,000 Cash balance at the end - Dec 31, 2012 28,000 Calculation of Dividend Paid: Retained Earnings - Dec 31, 2011 225,000.00 Add: Net Income 80,000.00 Sub-total 305,000.00 Retained Earnings - Dec 31, 2012 275,000.00 Dividend Paid 30,000.00 Answer 3. The Company Cash Condition is good. The Cash flow from Opeearting Activities are more than Cash used in Investing Activities.
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