Learning Outcomes
- Prepare a Statement of Cash Flows in proper form (both direct and indirect)
In previous sections, we’ve compiled the individual sections of the statement of cash flows for Rumble Corp. so now let’s put them all together and add one final step – the reconciliation of beginning and ending cash and cash equivalents:
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 | |
Notice how the three pieces fit together and reconcile the change in beginning and ending cash from the balance sheet:
| Description | Amount | Total |
|---|---|---|
| In millions | ||
| Panel A – Balance Sheet | 12/31/X1 | 12/31/X0 |
| Cash | $5,040 | $1,640 |
| Accounts Receivable | 1,735 | 1,750 |
| Equipment | 24,920 | 24,500 |
| Accumulated Depreciation | (1,565) | (1,540) |
| Total Assets | Single line $30,130 Double line |
Single line $26,350 Double line |
| Accounts Payable | $1,039 | $1,007 |
| Wages Payable | 135 | 55 |
| Income Taxes Payable | 60 | 42 |
| Note Payable – Long Term | 500 | 0 |
| Total Liabilities | Single line 1,734 |
Single line 1,104 |
| Common Stock | 13,500 | 12,500 |
| Retained Earnings | 14,896 | 12,746 |
| Total Liabilities and Owner’s Equity | Single line $30,130 Double line |
Single line $26,350 Double line |
If all the steps were done correctly, the bottom line of the statement of cash flows will equal the current cash balance on the balance sheet.
practice question
