Question

CHAPTER 10 Reporting the Results of Operations: The Activity 10-17. Use Problems 10-15 and 10-16 to prepare an activity statement (operating statement), a comparative statement of financial position (balance sheet), and a statement of cash flows (using the indirect method). What do you learn from these statements, and what questions do they raise?

Answer 1

SOLUTION:

Activity statement:

Revenues and support
Donation revenue	$80,000.00
Sales revenue	$110,000.00
Total revenues & support	$190,000.00
Expenses:
Grant Expense	$50,000.00
COGS	$58,000.00
Wage expense	$90,000.00
Interest expense	$3,000.00
Bad debts	$2,000.00
Depr.	$40,000.00
Total expenses	$243,000.00
Decrease in net assets	-$53,000.00

　

Statement of Financial Position:

Assets			Liabilities & Net Assets
	Year 2	Year 1		Year 2	Year 1
Current assets			Liabilities
Cash	$335,000.00	$10,000.00	Current liabilities
A/R, net of estimated uncollectibles of $2,000 in Year 2	$36,000.00	$26,000.00	Accounts payable	$27,000.00	$27,000.00
			Wages payable	$47,000.00	$32,000.00
			Total current liabilities	$74,000.00	$59,000.00
Pledges receivable	$50,000.00	$350,000.00
Inventory	$27,000.00	$25,000.00	Long-term liabilities
Total current assets	$448,000.00	$411,000.00	Notes payable	$320,000.00	$270,000.00
			Total long-term liabilities	$320,000.00	$270,000.00
Long-term assets
Fixed assets			Total liabilities	$394,000.00	$329,000.00
Buildings & Equipment, net	$325,000.00	$350,000.00
Total long-term assets	$325,000.00	$350,000.00	Net assets
			Unrestricted	$249,000.00	$302,000.00
			Temporary restricted	$30,000.00	$30,000.00
			Permanent restricted	$100,000.00	$100,000.00
			Total net assets	$379,000.00	$432,000.00
Total assets	$773,000.00	$761,000.00	Total equities	$773,000.00	$761,000.00

　

Cah flow statement:

Cash flows from operating activities
Decrease in unrestricted net assets	-$53,000.00
Plus: Expenses not requiring cash:
Depreciation	$40,000.00
Bad Debts	$2,000.00
Other adjustments:
Minus: Increase in accounts receivables	-$12,000.00
Plus: Decrease in pledges receivable	$300,000.00
Minus: Increase in inventory	-$2,000.00
Plus: Increase in wages payable	$15,000.00
Net cash from operating activities	$290,000.00
Cash flows from investing activities
Purchase of PPE	-$15,000.00
Net cash used in investing activities	-$15,000.00
Cash flows from financing activities
Borrowing with notes	$50,000.00
Net cash from financing activities	$50,000.00
Net increase/(decrease) in cash	$325,000.00
Cash at the beginning of year	$10,000.00
Cash at the end of year	$335,000.00