Concept explainers
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as the ending balance of cash at the end of the accounting period.
To Prepare: The Statement of cash flow for Company D, using the T-Accounts.
Explanation of Solution
T-account: T-account is the form of the ledger account, where the
The components of the T-account are as follows:
a) The title of the account
b) The left or debit side
c) The right or credit side
The T-accounts for Company D, for various accounts are shown below:
Cash (Statement of Cash Flows) (Amount ($) in millions) | |||
Cash Balance | 13 | ||
Operating activities: | |||
From customers | (1) 202 | (3) 132 | To suppliers of goods |
From dividends received | (2) 2 | (4) 28 | To employees |
(6) 5 | For interest | ||
(8) 17 | For income taxes | ||
Investing activities: | |||
Sale of equipment | (7) 7 | (10) 5 | Purchase of long term investment |
(12) 15 | Purchase of equipment | ||
Financing activities: | |||
Sale of bonds payable | (13) 25 | (15) 13 | Payment of dividends |
(16) 8 | Purchase of |
Table (1)
Accounts Receivable:
Accounts Receivable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Decrease in accounts receivable | 2 | ||||
Balance | (1) 2 |
Table (2)
Allowance for uncollectible accounts:
Allowance for uncollectible accounts | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in allowance for uncollectible accounts | 1 | ||||
Balance | (1) 1 |
Table (3)
Inventory:
Inventory Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in inventory | 5 | ||||
Balance | (3) 5 |
Table (4)
Dividend Receivable:
Dividend Receivable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in dividend receivable | 1 | ||||
Balance | (2) 1 |
Table (5)
Long-Term Investment:
Long-Term Investment Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in long-term investment | 5 | ||||
Balance | (10) 5 |
Table (6)
Land:
Land Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in land | 30 | ||||
Balance | X (11) 30 |
Table (7)
Building and Equipment:
Building and Equipment Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Decrease in building and equipment | 25 | ||||
December 31, 2018 | Purchase of equipment | (12) 15 | Balance | (7) 40 |
Table (8)
Accumulated Depreciation Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Accumulated depreciation | 25 | ||||
Depreciation | (7) 30 | December 31, 2018 | Balance | (5) 5 |
Table (9)
Accounts Payable:
Accounts Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Decrease in accounts payable | 7 | ||||
Balance | (3) 7 |
Table (10)
Salary Payable:
Salary Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Decrease in salary payable | 3 | ||||
Balance | (4) 3 |
Table (11)
Interest Payable:
Interest Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Increase in interest payable | 2 | ||||
Balance | (6) 2 |
Table (12)
Income Tax Payable:
Income Tax Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Decrease in income tax payable | 1 | ||||
Balance | (8) 1 |
Table (13)
Notes Payable:
Notes Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Notes payable | 30 | ||||
Balance | X (11) 30 |
Table (14)
Bonds Payable:
Bonds Payable Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Bonds payable | 25 | ||||
Balance | (13) 25 |
Table (15)
Discount on Bonds:
Discount on Bonds Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Discount on bond | 1 | ||||
Balance | (6) 1 |
Table (16)
Common stock:
Common stock Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Common stock | 10 | ||||
Balance | (14) 10 |
Table (17)
Paid-in Capital:
Paid-in Capital Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Paid-in capital | 4 | ||||
Balance | (14) 4 |
Table (18)
Retained Earnings:
Retained Earnings Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Payment of cash dividend | (15) 13 | Balance | (9) 25 | ||
Retained earning | (14) 14 |
Table (19)
Treasury Stock:
Treasury Stock Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Treasury stock | 8 | ||||
Balance | (16) 8 |
Table (20)
Note (X):
Purchase $30,000 worth of land by issuing a 13%, 7-year note is considered as non cash investing and financing activities.
Prepare T-account for income statement account of DUX Company for the year ended December 31, 2018:
Sales:
Sales Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Sales revenue | 200 | ||||
Balance | (1) 200 |
Table (21)
Dividend Revenue:
Dividend Revenue Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Dividend revenue | 3 | ||||
Balance | (2) 3 |
Table (22)
Cost of Goods Sold:
Cost of Goods Sold Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Cost of Goods Sold | 120 | ||||
Balance | (3) 120 |
Table (23)
Salaries Expense:
Salaries Expense Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Salaries Expense | 25 | ||||
Balance | (4) 25 |
Table (24)
Depreciation Expense:
Depreciation Expense Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Depreciation Expense | 5 | ||||
Balance | (5) 5 |
Table (25)
Bad debt Expense Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Bad debt Expense | 1 | ||||
Balance | (1) 1 |
Table (26)
Interest Expense:
Interest Expense Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Interest Expense | 8 | ||||
Balance | (6) 8 |
Table (27)
Loss on Sale of Building:
Loss on Sale of Building Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Loss on sale of building | 3 | ||||
Balance | (7) 3 |
Table (28)
Income Tax Expense:
Income Tax Expense Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Income Tax Expense | 16 | ||||
Balance | (8) 16 |
Table (29)
Net income (income summary):
Net Income (income summary)Account | ||||||
Date | Details | Debit ($) |
Date | Details | Credit ($) |
|
December 31, 2018 | Net income | 25 | ||||
Balance | (9) 25 |
Table (30)
Prepare the statement of cash flows using direct method for DUX Company for the year ended December 31, 2018:
DUX Company | ||
Statement of Cash Flows | ||
Year Ended December 31, 2018 | ||
Details | Amount ($) | Amount ($) |
Cash flows from operating activities: | ||
From customers | 202 | |
From dividends received | 2 | |
To suppliers of goods | (132) | |
To employees | (28) | |
For interest | (5) | |
For income taxes | (17) | |
Net cash flows from operating activities | 22 | |
Cash flows from investing activities: | ||
Sale of building | 7 | |
Purchase of long-term investment | (5) | |
Purchase of equipment | (15) | |
Net cash flows from investing activities | (13) | |
Cash flows from financing activities: | ||
Sale of bonds payable | 25 | |
Purchase of treasury stock | (8) | |
Payment of cash dividends | (13) | |
Net cash flows from financing activities | 4 | |
Net increase in cash | 13 | |
Cash balance, January 1, | 20 | |
Cash balance, December 31, | 33 |
Table (31)
Hence, the opening cash balance is $20 million and closing cash balance is $33 million.
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Chapter 21 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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