Essay on assignment 3

Submitted By sama94
Words: 310
Pages: 2

Assignment 3

BUSI2001 C- INTERMEDIATE ACCOUNTING I

1- Prepare a Statement of Cash Flows for Global Inc. using the direct method.
Harold Inc.
Statement of Cash Flows
For the year ended December 31, 20x2

Cash flow from operations
Cash collected from customers (sales –increase in accounts receivable) ($1650 000-$24 000) $1626 000
Cash paid to suppliers (Decrease in inventory-increase in Accounts Payable) (1,236,000-31,0000) $(1,186,00)
Cash paid for operation expenses (Decrease in prepaid expenses +
Decrease in salaries payable) (197,000-21,000+6,000) $(182,000)
Cash paid for interest (25,000-2000 increase in interest expense) $(23,000)
Cash paid for income taxes ( 27,000+3,000) Decrease in income taxes payable) $(30,000)

205,000 Cash flow from investing Purchase of property, plant and equipment (110,000 increase in PPE+
100,000cost of equipment sold) $(210,000) Proceeds on sale of PPE (50,000 NBV of PPE sold +6,000 Gain on sale)* $56,000 $(154,000)

* Accumulated Dep. On Purchase of property, plant and equipment sold=120,000 Dep. Expense -70,000 increase in accumulated Dep.
If we analyze the accumulated depreciation account:
Beginning balance $356,000 + Deprecation expense $120,000 – accumulated depreciation on disposal? = ending balance of $426,000
Therefore accumulated Depreciation on Purchase of property, plant and equipment sold is 50,000
NBV on Purchase of property, plant and equipment sold =$100,000 cost – 50,000 Accumulated depreciation=$ 50,000
If sold a gain of$6,000, then proceeds = $56,000

Cash flow from Financing
Issue of common shares 50,000
Repayment of long-term debt (6,000)
Dividends paid ** (25 000) 19,000

**Dividends declared =…