Note: Use Excel Or Word Only; Provide All Supporting Calcula ✓ Solved
Note Use Excel Or Word Only Provide All Supporting Calculations To
Note Use Excel Or Word Only Provide All Supporting Calculations To
Prepare a Statement of Cash Flows for Boscia Corporation based on the provided comparative balance sheet. Use Excel or Word exclusively for all calculations and supporting information. Show all work clearly to illustrate how you derived each cash flow element, including operating, investing, and financing activities. Ensure accurate reflection of changes in assets, liabilities, and equity to complete the statement comprehensively.
Sample Paper For Above instruction
The preparation of a Statement of Cash Flows is essential for understanding the cash inflows and outflows of a company over a specific period. It provides insights into the company's liquidity, solvency, and financial flexibility, which are not evident from the income statement or balance sheet alone. Using the comparative balance sheet provided for Boscia Corporation, I will demonstrate the step-by-step process to prepare the statement of cash flows by calculating the change in each account, identifying the nature of each change, and classifying these changes into operating, investing, or financing activities.
Step 1: Gathering Data and Calculating Changes
To begin, I extracted the ending and beginning balances for each account from the balance sheet. The accounts considered include cash and cash equivalents, accounts receivable, inventory, plant and equipment, accumulated depreciation, accounts payable, wages payable, taxes payable, bonds payable, deferred taxes, common stock, and retained earnings. The change in each account (ending balance minus beginning balance) indicates whether cash was received or used during the period.
| Account | Ending Balance | Beginning Balance | Change | Significance |
|---|---|---|---|---|
| Cash and cash equivalents | $44 | $38 | $6 | Increase in cash |
| Accounts receivable | Data missing | Data missing | Data missing | Analysis needed |
| Inventory | Data missing | Data missing | Data missing | Analysis needed |
| Plant and equipment | Data missing | Data missing | Data missing | Analysis needed |
| Accumulated depreciation | Data missing | Data missing | Data missing | Analysis needed |
| Accounts payable | $70 | $60 | $10 | Increase in liabilities |
| Wages payable | Data missing | Data missing | Data missing | Analysis needed |
| Taxes payable | Data missing | Data missing | Data missing | Analysis needed |
| Bonds payable | Data missing | Data missing | Data missing | Analysis needed |
| Deferred taxes | Data missing | Data missing | Data missing | Analysis needed |
| Common stock | Data missing | Data missing | Data missing | Analysis needed |
| Retained earnings | Data missing | Data missing | Data missing | Analysis needed |
Note: The complete analysis depends on all account balances, which are partially missing from the provided data. Assume additional data if required or specify where the data is unavailable.
Step 2: Classify Changes into Operating, Investing, and Financing Activities
Changes in accounts such as receivables, payables, inventory, and accrued expenses relate to operating activities. Movements in plant and equipment relate to investing activities, while changes in debt and equity accounts pertain to financing activities.
Step 3: Calculate Net Cash Provided by Operating Activities
This involves adjusting net income (if known) for non-cash items and changes in working capital. In absence of net income data, we focus on changes in current assets and liabilities to estimate cash flows from operations.
Step 4: Calculate Net Cash Used in Investing Activities
Include purchases or sales of property, plant, and equipment. An increase in plant and equipment indicates cash outflows; a sale or decrease indicates inflows.
Step 5: Calculate Net Cash Provided by / Used in Financing Activities
Includes issuing or repurchasing stock, borrowing or repaying debt, and dividend payments. An increase in bonds payable suggests cash inflow; repayment results in outflows.
Conclusion
Given the limitations of available data, the actual amount of net cash flows in each area cannot be precisely calculated without additional figures, such as net income, specific details of asset purchases or disposals, and debt issuances or repayments. However, the outlined step-by-step approach using the direct or indirect method provides a comprehensive framework for preparation. This process emphasizes the importance of detailed and accurate financial data to faithfully represent a company's cash flow activities.
References
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