Accounting - Corporations

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4_part4.xlsx

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Problem

Comprehensive Problem 4: Part 4

Bailey's Chocolates has provided statements of retained earnings, income statements, and balance

sheets for the months of January and February 2012. The company wants you to calculate the cash

flow from operating activities for the period ending February 2012 using the indirect method.

Using the Indirect Method produce a Cash Flow from Operating Activities.

Cash Flows from Operating Activities (Indirect Method)

Net Cash Flow from Operating Activities

Given Information

			Bailey's Chocolates							Bailey's Chocolates
			Income Statement							Income Statement					Bailey's Chocolates
			Month Ending January 31, 2012							Month Ending February 29, 2012					Statement of Retained Earnings
															Month Ending January 31, 2012
Revenue				$ 20,000			Revenue				$ 23,000
Cost of Good Sold				(5,000)			Cost of Good Sold				(7,000)			Retained earnings, January 1, 2012			$ - 0
Gross Margin					$ 15,000		Gross Margin					$ 16,000		Net Gain, January 31, 2012			$ 9,930
Expenses							Expenses
	Salary Expense			900				Salary Expense			1,000			Less Withdrawals		- 0
	Supplies Expense			20				Supplies Expense			30			Increase in Retained Earnings			$ 9,930
	Office Equipment Expense			200				Office Equipment Expense			225			Retained earnings, January 31, 2012			$ 9,930
	Rent Expense			1,000				Rent Expense			1,000
	Insurance Expense			100				Insurance Expense			100
	Interest Expense-Note			100				Interest Expense-Note			100
	Interest Expense-Mortgage			1,000				Interest Expense-Mortgage			1,000				Bailey's Chocolates
	Depreciation Expense-Building			1,500				Depreciation Expense-Building			1,500				Statement of Retained Earnings
	Depreciation Expense-Equipment			250				Depreciation Expense-Equipment			250				Month Ending February 29, 2012
Total Expenses					$ 5,070		Total Expenses					$ 5,205
Net Income					$ 9,930		Net Income					$ 10,795		Retained earnings, February 1, 2012			$ 9,930
														Net Gain, February 1, 2012			$ 10,795
																	$ 20,725
			Bailey's Chocolates							Bailey's Chocolates				Less Withdrawals (Dividends)		$ (9,930)
			Balance Sheet							Balance Sheet				Increase in Retained Earnings			$ 10,795
			Month Ending January 31, 2012							Month Ending February 29, 2012				Retained earnings, February 29, 2012			$ 10,795
	Assets				Liabilities			Assets				Liabilities
Current Assets				Current Liabilities			Current Assets				Current Liabilities
Cash		$ 85,260		Accounts Payable		$ 3,500	Cash		$ 90,000		Accounts Payable		$ 3,200
Accounts receivable		10,600		Salary Payable		200	Accounts receivable		10,875		Salary Payable		150
Inventory		3,220		Total Current Liab		$ 3,700	Inventory		2,750		Total Current Liab		$ 3,350
Supplies		150					Supplies		120
Prepaid Office Equipment		150		Long-Term Liabilities			Prepaid Office Equipment		100		Long-Term Liabilities
Prepaid Rent		1,500		Notes Payable		$ 48,000	Prepaid Rent		500		Notes Payable		$ 48,000
Security Deposit		1,500		Int Pay-Note		400	Security Deposit		1,500		Int Pay-Note		500
Prepaid Insurance		400		Mortgage Payable		480,000	Prepaid Insurance		300		Mortgage Payable		480,000
Total Current Assets		$ 102,780		Int Pay-Mort		2,000	Total Current Assets		$ 106,145		Int Pay-Mort		3,000
				Total LT Liabilities		$ 530,400					Total LT Liabilities		$ 531,500
Property, Plant & Equipment				Total Liabilities		$ 534,100	Property, Plant & Equipment				Total Liabilities		$ 534,850
Building	500,000						Building	500,000
Acc Dep-Building	(1,500)	498,500		Shareholder's Equity			Acc Dep-Building	(3,000)	497,000		Shareholder's Equity
Equipment	9,000			Common Stock		$ 6,000	Equipment	9,000			Common Stock		$ 6,000
Acc Dep-Equipment	(250)	8,750		APIC-Common		60,000	Acc Dep-Equipment	(500)	8,500		APIC-Common		60,000
Total PP & E		$ 507,250		Retained Earnings		9,930	Total PP & E		$ 505,500		Retained Earnings		10,795
				Total Equity		$ 75,930					Total Equity		$ 76,795
Total Assets		$ 610,030		Total Liab & Equity		$ 610,030	Total Assets		$ 611,645		Total Liab & Equity		$ 611,645