Preparing a Statement of Cash Flows

  • 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

Rumble Corp.
Statement of Cash Flows
for the year ended 12/31/x1
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:

RUMBLE CORP
Balance Sheets
As of
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.