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Avatar Company Uses the Direct Method to Prepare Its Statement

question 150

Essay

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following financial statement information for the year 2014: $Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following financial statement information for the year 2014: Additional information provided: • Equipment costing $52,000 was purchased for cash. • Equipment with a net asset value of $10,000 was sold for $14,000 • Depreciation expense of $12,000 was recorded during the year. • During 2014, the company repaid $40,000 of long-term notes payable. • During 2014, the company borrowed $34,000 on a new note payable • There were no stock retirements during the year. • There were no sales of treasury stock during the year. Please prepare a complete statement of cash flows using the direct method, in the following format: \begin{array} { | l | l | l | } \hline \text { Operating activities: } &\quad\quad &\quad\quad \\ \hline \text { Receipts } & & \\ \hline \text { Collections from customers } & & \\ \hline \text { Interest received } & & \\ \hline \text { Total cash receipts } & & \\ \hline \text { Tayments } & & \\ \hline \text { To employees } & & \\ \hline \text { For interest } & & \\ \hline \text { For income tax } & & \\ \hline \text { Total cash payments } & & \\ \hline \text { Net cash from operating activities } & & \\ \hline & & \\ \hline \text { Investing activities: } & & \\ \hline \text { Proceeds from sale of assets } & & \\ \hline \text { Acquisition of assets } & & \\ \hline \text { Net cash from investing activities } & & \\ \hline & & \\ \hline \text { Financing activities: } & & \\ \hline \text { Issuance of stock } & & \\ \hline \text { Purchase of treasury stock } & & \\ \hline \text { Borrowing on notes payable } & & \\ \hline \text { Repayments of notes payable } & & \\ \hline \text { Payment of dividends } & & \\ \hline \text { Net cash from financing activities } & & \\ \hline\\ \hline \text { Net change in cash } & & \\ \hline \text { Cash balance, December 31, 2013} & & \\ \hline \text { Cash balance, December 31, 2014 }\\ \hline \end{array}$
Additional information provided:
• Equipment costing $52,000 was purchased for cash.
• Equipment with a net asset value of $10,000 was sold for $14,000
• Depreciation expense of $12,000 was recorded during the year.
• During 2014, the company repaid $40,000 of long-term notes payable.
• During 2014, the company borrowed $34,000 on a new note payable
• There were no stock retirements during the year.
• There were no sales of treasury stock during the year.
Please prepare a complete statement of cash flows using the direct method, in the following format:
$\begin{array} { | l | l | l | } \hline \text { Operating activities: } &\quad\quad &\quad\quad \\\hline \text { Receipts } & & \\\hline \text { Collections from customers } & & \\\hline \text { Interest received } & & \\\hline \text { Total cash receipts } & & \\\hline \text { Tayments } & & \\\hline \text { To employees } & & \\\hline \text { For interest } & & \\\hline \text { For income tax } & & \\\hline \text { Total cash payments } & & \\\hline \text { Net cash from operating activities } & & \\\hline & & \\\hline \text { Investing activities: } & & \\\hline \text { Proceeds from sale of assets } & & \\\hline \text { Acquisition of assets } & & \\\hline \text { Net cash from investing activities } & & \\\hline & & \\\hline \text { Financing activities: } & & \\\hline \text { Issuance of stock } & & \\\hline \text { Purchase of treasury stock } & & \\\hline \text { Borrowing on notes payable } & & \\\hline \text { Repayments of notes payable } & & \\\hline \text { Payment of dividends } & & \\\hline \text { Net cash from financing activities } & & \\\hline\\\hline \text { Net change in cash } & & \\\hline \text { Cash balance, December 31, 2013} & & \\\hline \text { Cash balance, December 31, 2014 }\\\hline\end{array}$

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