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Q11SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 772

Short Answer

Preparing a statement of cash flows using the direct method Jelly Bean, Inc. began 2018 with cash of $58,000. During the year, Jelly Bean earned revenue of $595,000 and collected $614,000 from customers. Expenses for the year totaled $427,000, of which Jelly Bean paid $212,000 in cash to suppliers and $205,000 in cash to employees. Jelly Bean also paid $148,000 to purchase equipment and a cash dividend of $57,000 to its stockholders during 2018. Prepare the company’s statement of cash flows for the year ended December 31, 2018. Format operating activities by the direct method.

Net Increase/(Decrease) in cash is ($8,000).

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Cash flow from operating activities

Cash flows from operating activities

Receipts:

Collection from customers

$614,000

Payments:

To suppliers

($212,000)

To employees

($205,000)

Net cash provided by operating activities

$197,000

Step 2: Statement of cash flows- direct method

Jelly Bean Inc.

Statement of cash flows

Year ended 31st December, 2018

Cash flows from operating activities

$197,000

Cash flows from investing activities

Cash purchase of equipment

($148,000)

Net cash used for investing activities

($148,000)

Cash flows from financing activities

Cash payment of dividends

($57,000)

Net cash provided by financing activities

($57,000)

Net Increase/(Decrease) in cash

($8,000)

Cash balance, December 31, 2017

$58,000

Cash balance, December 31, 2018

$50,000

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