- Demonstrate the use of a worksheet to create the Statement of Cash Flows
In order to ensure accuracy and make the process as efficient as possible, accountants have developed a worksheet process to create the statement of cash flows. We’ll demonstrate that process here using the indirect method because that is its most common use and the indirect method is the most common presentation.
First, we look at the beginning and ending balance sheets:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 5,040 | ||
| Accounts Receivable | 1,750 | 1,735 | ||
| Equipment | 24,500 | 24,920 | ||
| Accumulated Depreciation | (1,540) | (1,565) | ||
| Total Assets | 26,350 | 30,130 | ||
| Accounts Payable | (1,007) | (1,039) | ||
| Wages Payable | (55) | (135) | ||
| Income Taxes Payable | (42) | (60) | ||
| Note Payable – Long Term | 0 | (500) | ||
| Total Liabilities | (1,104) | (1,734) | ||
| Common Stock | (12,500) | (13,500) | ||
| Retained Earnings | (12,746) | (14,896) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | (30,130) | ||
| 0 | 0 | |||
We’re showing credit balances on this spreadsheet as negative numbers (in parenthesis), but different accountants may do this differently. Also notice the December 31, 20X0 balance is presented as the January 1, 20X1 balance. Again, that is personal preference.
We’ll add a template to the bottom of this balance sheet spreadsheet that we will use to capture the changes in cash:
| Panel B – Statement of Cash Flows | |||
|---|---|---|---|
| Cash Flows from Operating Activities: | |||
| Net Income | |||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | |||
| Depreciation Expense – Plant Assets | |||
| Decrease in accounts receivable | |||
| Gain on sale of equipment | |||
| Increase in Accounts Payable | |||
| Increase in Wages Payable | |||
| Increase in Income Taxes Payable | |||
| Net Cash Provided by Operating Activities | |||
| Cash Flows from Investing Activities: | |||
| Cash Paid for Acquisition of Plant Assets | |||
| Proceeds from sale of equipment | |||
| Net Cash Used for Investing Activities | |||
| Cash Flows from Financing Activities: | |||
| Cash Receipt from Issuance of Common Stock | |||
| Proceeds from issuance of long-term debt | |||
| Cash Payment of Dividends | |||
| Net Cash Provided by Financing Activities | |||
| Net Increase (Decrease) in Cash: | |||
| Total | |||
| – | |||
And now we fill in the worksheet one line at a time, starting with accounts receivable.
Every debit will have to have a credit. Accounts receivable decreased by $15, so we credit that account on the spreadsheet and debit the corresponding line on the statement of cash flows.
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 24,500 | ||
| Accumulated Depreciation | (1,540) | (1,540) | ||
| Total Assets | 26,350 | 0 | 15 | 26,335 |
| Accounts Payable | (1,007) | (1,007) | ||
| Wages Payable | (55) | (55) | ||
| Income Taxes Payable | (42) | (42) | ||
| Note Payable – Long Term | 0 | 0 | ||
| Total Liabilities | (1,104) | 0 | 0 | (1,104) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 0 | (26,350) |
| 0 | 0 | 15 | (15) | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | ||||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | ||||
| Increase in Accounts Payable | ||||
| Increase in Wages Payable | ||||
| Increase in Income Taxes Payable | ||||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | ||||
| Proceeds from sale of equipment | ||||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | ||||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 15 | $ – | ||
Next, we record the purchase of equipment for cash by debiting the balance sheet line and crediting the corresponding line on the statement of cash flows (cash used for investing):
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 25,080 | |
| Accumulated Depreciation | (1,540) | (1,540) | ||
| Total Assets | 26,350 | 580 | 15 | 26,915 |
| Accounts Payable | (1,007) | (1,007) | ||
| Wages Payable | (55) | (55) | ||
| Income Taxes Payable | (42) | (42) | ||
| Note Payable – Long Term | 0 | 0 | ||
| Total Liabilities | (1,104) | 0 | 0 | (1,104) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 0 | (26,350) |
| 0 | 580 | 15 | 565 | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | ||||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | ||||
| Increase in Accounts Payable | ||||
| Increase in Wages Payable | ||||
| Increase in Income Taxes Payable | ||||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | ||||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | ||||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 15 | $ 580 | ||
| Total debits/credits | $ 595 | $ 595 | ||
Next, we know that we sold equipment and recorded a gain on the sale:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 160 | 24,920 |
| Accumulated Depreciation | (1,540) | 100 | (1,440) | |
| Total Assets | 26,350 | 680 | 175 | 26,855 |
| Accounts Payable | (1,007) | (1,007) | ||
| Wages Payable | (55) | (55) | ||
| Income Taxes Payable | (42) | (42) | ||
| Note Payable – Long Term | 0 | 0 | ||
| Total Liabilities | (1,104) | 0 | 0 | (1,104) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 0 | (26,350) |
| 0 | 680 | 175 | 505 | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | ||||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | ||||
| Increase in Wages Payable | ||||
| Increase in Income Taxes Payable | ||||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | ||||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 165 | $ 670 | ||
| Total debits/credits | $ 845 | $ 845 | ||
Bit by bit, we are reconstructing the ending balance sheet by recording the changes to each account caused by cash transactions.
Accumulated depreciation is the next line on the balance sheet as we work our way from top to bottom. We record depreciation expense as a credit to accumulated depreciation (an increase) and a debit to depreciation expense on the statement of cash flows (which will be an add-back to net income).
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | (1,007) | ||
| Wages Payable | (55) | (55) | ||
| Income Taxes Payable | (42) | (42) | ||
| Note Payable – Long Term | 0 | 0 | ||
| Total Liabilities | (1,104) | 0 | 0 | (1,104) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 0 | (26,350) |
| 0 | 580 | 200 | 380 | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | ||||
| Increase in Wages Payable | ||||
| Increase in Income Taxes Payable | ||||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | ||||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 290 | $ 670 | ||
| Total debits/credits | $ 870 | $ 870 | ||
Then we adjust the current liability accounts:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 0 | ||
| Total Liabilities | (1,104) | 0 | 130 | (1,234) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 130 | (26,480) |
| 0 | 580 | 330 | 250 | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | ||||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 420 | $ 670 | ||
| Total debits/credits | $ 1,000 | $ 1,000 | ||
The long-term borrowing increased cash and was a financing activity:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 500 | (500) | |
| Total Liabilities | (1,104) | 0 | 630 | (1,734) |
| Common Stock | (12,500) | (12,500) | ||
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 630 | (26,980) |
| 0 | 580 | 830 | (250) | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | ||||
| Proceeds from issuance of long-term debt | 500 | |||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 920 | $ 670 | ||
| Total debits/credits | $ 1,500 | $ 1,500 | ||
And issuing stock for cash also represents cash provided by a financing activity:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 500 | (500) | |
| Total Liabilities | (1,104) | 0 | 630 | (1,734) |
| Common Stock | (12,500) | 1,000 | (13,500) | |
| Retained Earnings | (12,746) | (12,746) | ||
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 1,630 | (27,980) |
| 0 | 580 | 1,830 | (1,250) | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | 1,000 | |||
| Proceeds from issuance of long-term debt | 500 | |||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 1,920 | $ 670 | ||
| Total debits/credits | $ 2,500 | $ 2,500 | ||
We now post net income to retained earnings:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 500 | (500) | |
| Total Liabilities | (1,104) | 0 | 630 | (1,734) |
| Common Stock | (12,500) | 1,000 | (13,500) | |
| Retained Earnings | (12,746) | 2,610 | (15,356) | |
| Total Liabilities and Stockholders’ Equity | (26,350) | 0 | 4,240 | (30,590) |
| 0 | 580 | 4,440 | (3,860) | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | 2,610 | |||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | 1,000 | |||
| Proceeds from issuance of long-term debt | 500 | |||
| Cash Payment of Dividends | ||||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 4,530 | $ 670 | ||
| Total debits/credits | $ 5,110 | $ 5,110 | ||
Dividends reduce retained earnings:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 1,640 | ||
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 580 | 200 | 26,730 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 500 | (500) | |
| Total Liabilities | (1,104) | 0 | 630 | (1,734) |
| Common Stock | (12,500) | 1,000 | (13,500) | |
| Retained Earnings | (12,746) | 460 | 2,610 | (14,896) |
| Total Liabilities and Stockholders’ Equity | (26,350) | 460 | 4,240 | (30,130) |
| 0 | 1,040 | 4,440 | (3,400) | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | 2,610 | |||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | 1,000 | |||
| Proceeds from issuance of long-term debt | 500 | |||
| Cash Payment of Dividends | 460 | |||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | ||||
| Total | $ 4,530 | $ 1,130 | ||
| Total debits/credits | $ 5,570 | $ 5,570 | ||
And the final step is to post the change in cash:
| Panel A – Balance Sheet | 1/1/X1 | Transaction Analysis | 12/31/X1 | |
|---|---|---|---|---|
| Debit | Credit | |||
| Cash | 1,640 | 3,400 | 5,040 | |
| Accounts Receivable | 1,750 | 15 | 1,735 | |
| Equipment | 24,500 | 580 | 60 | 25,020 |
| Accumulated Depreciation | (1,540) | 125 | (1,665) | |
| Total Assets | 26,350 | 3,980 | 200 | 30,130 |
| Accounts Payable | (1,007) | 32 | (1,039) | |
| Wages Payable | (55) | 80 | (135) | |
| Income Taxes Payable | (42) | 18 | (60) | |
| Note Payable – Long Term | 0 | 500 | (500) | |
| Total Liabilities | (1,104) | 0 | 630 | (1,734) |
| Common Stock | (12,500) | 1,000 | (13,500) | |
| Retained Earnings | (12,746) | 460 | 2,610 | (14,896) |
| Total Liabilities and Stockholders’ Equity | (26,350) | 460 | 4,240 | (30,130) |
| 0 | 4,440 | 4,440 | 0 | |
| Panel B – Statement of Cash Flows | ||||
| Cash Flows from Operating Activities | ||||
| Net Income | 2,610 | |||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
| Depreciation Expense – Plant Assets | 125 | |||
| Decrease in Accounts Receivable | 15 | |||
| Gain on sale of equipment | 90 | |||
| Increase in Accounts Payable | 32 | |||
| Increase in Wages Payable | 80 | |||
| Increase in Income Taxes Payable | 18 | |||
| Net Cash Provided by Operating Activities | ||||
| Cash Flows from Investing Activities | ||||
| Cash Paid for Acquisition of Plant Assets | 580 | |||
| Proceeds from sale of equipment | 150 | |||
| Net Cash Used for Investing Activities | ||||
| Cash Flows from Financing Activities | ||||
| Cash Receipt from Issuance of Common Stock | 1,000 | |||
| Proceeds from issuance of long-term debt | 500 | |||
| Cash Payment of Dividends | 460 | |||
| Net Cash Provided by Financing Activities | ||||
| Net Increase (Decrease) in Cash | 3,400 | |||
| Total | $ 4,530 | $ 4,530 | ||
| Total debits/credits | $ 8,970 | $ 8,970 | ||
And now the numbers are all in place, everything is accounted for, and all we have to do is place the numbers into the proper format along with some supplemental information we’ll have to get from the general ledger:
Subcategory, Cash flows from financing activities
| Description | Amount | Total |
|---|---|---|
| In millions | ||
| Subcategory, Cash flows from operating activities | ||
| Net income | $ 2,610 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 125 | |
| Decrease in Accounts Receivable | 15 | |
| Gain on sale of equipment | (90) | |
| Increase in Accounts Payable | 32 | |
| Increase in income taxes payable | 80 | |
| Increase in other liabilities | 18 | |
| Total adjustments | 180 | |
| Net cash from operating activities | Single Line | Single Line $2,790 |
| Subcategory, Cash flows from investing activities | ||
| Purchase of property, plant, and equipment | (580) | |
| Proceeds from sale of equipment | 150 | |
| Net cash used in investing activities | Single Line | Single Line (430) |
| Proceeds from issuance of common stock | 1,000 | |
| Proceeds from issuance of long-term debt | 500 | |
| Dividends paid | (460) | |
| Net cash used in financing activities | Single Line | Single Line 1,040 |
| Net increase in cash and cash equivalents | 3,400 | |
| Cash and cash equivalents at beginning of period | 1,640 | |
| Cash and cash equivalents at end of period | Single Line $5,040 Double Line |
|
| Supplemental information: | ||
| Cash paid for interest | $ 310 | |
| Cash paid for income taxes | $ 1,700 | |
Congratulations! You’ve now worked all the way through the worksheet and created the Statement of Cash Flows.