Create the statement of cashflow with indirect method Interp

Create the statement of cash-flow with indirect method

Interpret the result of the statement of cash flow with percentage

Instruction:

[1] Please use the balance sheet as follows to classify each activity (operating, investing, and financing) from the column of different.

[2] please create a new statement of cash-flow from your classification on balance sheet.

[3] The statement of cash flow will be provided to measure the company’s cash flow situation. Also, you need to interpret the result of your measurement.

Balance sheet

SILVERT CORPORATION

Balance Sheet

December 31

Different

Operating

Investing

Financing

2012

2011

ASSET

Cash

$ 28,000                

$ 20,000             

$8,000

Receivable (net)

70,000

62,000

$8,000

Other current assets

90,000

73,000

$17,000

Long-term investment

62,000

60,000

$2,000

Plant and equipment (net)

510,000

470,000

$40,000

Total Assets

$ 760,000          

$ 685,000        

$75,000

LIABILITIES AND STOCKHOLDERS\' EQUITY

Current liabilities

$ 75,000                

$ 70,000             

$5,000

Long-term debt

80,000

90,000

($10,000)

Common stock

330,000

300,000

$30,000

Retained earnings

275,000

225,000

$50,000

Total liabilities and stockholders’ equity

760,000

685,000

$75,000

]2] Create the statement of cash-flow by using the indirect method. Company has net income as starting point of $80,000.

                                                        STATEMENT OF CASH FLOW

Operating Activities

              Net Income

$ 80,000

Cashflow from Operations

Investing Activities

Cashflow from Investing

Financing Activities

Cashflow from Financing

Balance sheet
SILVERT CORPORATION
Balance Sheet
December 31
			Different	Operating	Investing	Financing
	2012	2011
ASSET
Cash	$ 28,000	$ 20,000	$8,000
Receivable (net)	70,000	62,000	$8,000
Other current assets	90,000	73,000	$17,000
Long-term investment	62,000	60,000	$2,000
Plant and equipment (net)	510,000	470,000	$40,000
Total Assets	$ 760,000	$ 685,000	$75,000
LIABILITIES AND STOCKHOLDERS\' EQUITY
Current liabilities	$ 75,000	$ 70,000	$5,000
Long-term debt	80,000	90,000	($10,000)
Common stock	330,000	300,000	$30,000
Retained earnings	275,000	225,000	$50,000
Total liabilities and stockholders’ equity	760,000	685,000	$75,000

Solution

Answer 1. Silvert Corporation Balance Sheet December 31 Difference Operating Investing Financing 2012 2011 Asset Cash          28,000.00      20,000.00        8,000.00 Receivable (Net)          70,000.00      62,000.00        8,000.00      8,000.00 Other Current Assets          90,000.00      73,000.00     17,000.00    17,000.00 Long Term Investment          62,000.00      60,000.00        2,000.00      2,000.00 Plant & Equipment (Net)        510,000.00    470,000.00     40,000.00    40,000.00 Total Assets        760,000.00    685,000.00 Liabilities & Stockholders\' Equity Current Liabilities          75,000.00      70,000.00        5,000.00      5,000.00 Long Term Debt          80,000.00      90,000.00 (10,000.00) (10,000.00) Common Stock        330,000.00    300,000.00     30,000.00     30,000.00 Retained Earnings        275,000.00    225,000.00     50,000.00 Total Liabilities & Stockholders\' Equity        760,000.00    685,000.00 Answer 2. Silvert Corporation Statement of Cash Flows (Indirect Method) For the Year ended Dec 31, 2012 Cash Flow from opearating activities: Net Income            80,000 Add/(Less) non cash effects on operating activities Increase in Accounts Receivables                (8,000) Increase in Other Current Assets              (17,000) Increase in Current Liabilities                  5,000          (20,000) Net Cash provided by operating activities            60,000 Cash flow from Investing Activities Purchase of Long Term Investment                (2,000) Purchase of Plant & Euipment (net)              (40,000) Net Cash used by Investing activities          (42,000) Cash Flow from Financing Activities Paymnet of Long Term debt              (10,000) Issue of Common Stock                30,000 Cash dividend paid              (30,000) Net Cash used by Financing activities          (10,000) Net Increase / (Decrease) in Cash              8,000 Cash balance at the beginning - Dec 31, 2011            20,000 Cash balance at the end - Dec 31, 2012            28,000 Calculation of Dividend Paid: Retained Earnings - Dec 31, 2011        225,000.00 Add: Net Income          80,000.00 Sub-total        305,000.00 Retained Earnings - Dec 31, 2012        275,000.00 Dividend Paid          30,000.00 Answer 3. The Company Cash Condition is good. The Cash flow from Opeearting Activities are more than Cash used in Investing Activities.