Q5TI - Horngren'S Financial And Managerial Accounting

Question

Question: Muench, Inc.’s accountant has partially completed the spreadsheet for the statement of cash flows. Fill in the remaining missing information.

 

Step-by-Step Solution

Answer

Answer

 

Net increase in cash is $1,250.

Step 1: Calculation of missing information

Particulars	Balance (31/12/2018) (a)	Balance (31/12/2017) (b)	–(b)
Net Income	$6,300	$4,000	$2,300
Increase in accounts receivables	$5,000	$3,200	$1,800
Decrease in accounts payable	$3,500	$5,000	$1,500

Step 2: Statement showing cash flow from operating activities

MUENCH Inc. Statement of cash flows Year ended 31st December, 2018
Cash flows from operating activities
Net Income		$2,300
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation expense-Plant assets	$100
Increase in account receivables	($1,800)
Decrease in account payables	$1,500	($200)
Net cash provided by operating activities		$2,100
Cash flows from investing activities
Cash payment for acquisition of plant assets	($1,000)
Net cash used for investing activities		($1,000)
Cash flows from financing activities
Cash receipt from issuance of common stock	$5,850
Cash payment of dividends	($5,700)
Net cash provided by financing activities		$150
Net Increase/(Decrease) in cash		$1,250