ACCT1101 Lecture 9: L9

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lavendermouse880

29 May 2018

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Accounting

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ACCT1101

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lOMoARcPSD|2476239

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Lecture9:TheCashFlowStatement

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CashFlowStatementreports(summarises)thechangesinabusiness’cashduringanaccounting

period

‐

Creditsalesnotreflectedincashflow.Althoughcreditsalesarereflectedinincomestatementasa

revenue,wouldnotrecordonthecashflow,untilthecashwasreceived

‐

Allinflowsandoutflows,dividedintooperating,investingandfinancingactivities



OperatingActivities:theprimaryactivitiesofbuying,sellinganddeliveringgoodsforsaleaswell

asprovidingservices



Totalcashcollections=netsales+previousyearaccountsreceivable(creditsalesfromlastyear)–

currentyearaccountsreceivable(creditsalesfromthisyear)

Note*Iftheaccountsreceivableaccountdecreasesduringaperiod,thenthebusinesshascollected

morecashfromcustomersthantheamountofcurrentcreditsalesmade.

TotalCashpaymentfrompurchasesbudget(paymentstosuppliers)=previousyearaccounts

payable(creditpurchasesfromlastyear)–currentyearaccountspayable(creditpurchasesfromthis

year)+currentyearpurchases.



Currentyearpurchases=currentyearCOGS+desiredendinginventorycurrentyear–ending

inventoryfrompreviousyear.



Totalcashpaymenttoemployees’=Wagescost+previousyearsalariespayable–currentyear

salariespayable

InvestingActivities:lendingmoneyandcollectingontheloans,investinginothercompaniesand

buyingandsellingpropertyandequipment.(Lendingmoney).Changesnon‐currentassetinbalance

sheet.

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he accounting staff of Harris Company has assembled the followinginformation for the year ended December 31, 2011:


Cash sales	$	810,000
Credit sales		2,500,000
Collections on accounts receivable		2,205,000
Cash transferred from the money market fund to thegeneral bank account		250,000
Interest and dividends received		100,000
Purchases (all on account)		1,800,000
Payments on accounts payable to merchandisesuppliers		1,470,000
Cash payments for operating expenses		1,065,000
Interest paid		180,000
Income taxes paid		95,000
Loans made to borrowers		500,000
Collections on loans (excluding receipts ofinterest)		260,000
Cash paid to acquire plant assets		3,100,000
Book value of plant assets sold		650,300
Loss on sales of plant assets		80,400
Proceeds from issuing bonds payable		2,500,000
Dividends paid		120,000
Cash and cash equivalents, Jan. 1		489,000

Cashflows from operating activities:

Cashreceived fromcustomers ________________

Interestand dividendsreceived ________________

Cashprovided by operating activities _______________

Cashpaid to suppliers and employees ______________

Incometaxespaid ________________

Interestpaid ________________

Cashdisbursed for operating activities ______________

Netcash flow from operatingactivites ______________

Cashflows from investing activities:

Proceedsfrom sales of plantassets _______________

Loansmade toborrowers _______________

Collectionsonloans ________________

Cashpaid to acquire plantassets ________________

Netcash used in investingactivities: ________________

Cashflows from financing activites:

Dividendspaid _________________

Proceedsfrom issuing bonds payable ________________

Netcash provided by financing activites _______________

Netdecrease in cash and cash equivalents ____________

Cashand cash equivalents, beginning of year __________

Cashand cash equivalents, end of year _______________

Compute the amount of collections from customers

Cash reveived fromcustomers _________________

Compute the amount of cash paid to suppliers andemployees

Cash paid to suppliers and employees _______________

Compute the amount of proceeds from sales of plantassets

Proceeds from sales of plantassets _________________

Show your work

lavenderfly716

Dec. 31,2014		Dec. 31,2013
Assets
Cash		$130	$44
Accounts receivable(net)		75	55
Inventories		47	30
Land		107	125
Equipment		60	48
Accumulateddepreciation-equipment		(16)	(8)
	Total	$403	$294
Liabilities andStockholders' Equity
Accounts payable(merchandise creditors)		$51	$44
Dividends payable		8	-
Common stock, $10par		27	14
Paid-in capital inexcess of par-common stock		55	34
Retained earnings		262	202
	Total	$403	$294

The following additional information is taken from therecords:

Land was sold for $45.

Equipment was acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $87 credit to Retained Earnings for net income.

There was a $27 debit to Retained Earnings for cash dividendsdeclared.

a. Prepare a statement of cash flows, using theindirect method of presenting cash flows from operating activities.Use the minus sign to indicate cash out flows, cash payments,decreases in cash and for any adjustments, if required.

Tru-Built Construction Inc.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

Adjustments to reconcile net income to net cash flow fromoperating activities:

Changes in current operating assets and liabilities:

Net cash flow from operating activities

Cash flows from investing activities:

Net cash flow provided by investing activities

Cash flows from financing activities:

Net cash flow provided by financing activities

Cash at the beginning of the year

Cash at the end of the year

Was Tru-Built Construction Inc.'s cash flow from operations moreor less than net income? LESS OR MORE

purplepug292

IKIBAN INC. Comparative Balance Sheets June 30, 2015 and 2014
	2015			2014
Assets
Cash	$	96,500		$	56,200
Accounts receivable, net		69,300			51,400
Inventory		66,600			96,800
Prepaid expenses		5,100			6,400

Total current assets		237,500			210,800
Equipment		135,200			120,000
Accum. depreciationâEquipment		(28,900	)		(10,500	)

Total assets	$	343,800		$	320,300

Liabilities and Equity
Accounts payable	$	26,900		$	32,200
Wages payable		7,100			16,700
Income taxes payable		2,500			4,100

Total current liabilities		36,500			53,000
Notes payable (long term)		42,000			70,000

Total liabilities		78,500			123,000
Equity
Common stock, $5 par value		240,000			189,000
Retained earnings		25,300			8,300

Total liabilities and equity	$	343,800		$	320,300

IKIBAN INC. Income Statement For Year Ended June 30, 2015
Sales			$	673,000
Cost of goods sold				407,000

Gross profit				266,000
Operating expenses
Depreciation expense	$	53,000
Other expenses		66,900

Total operating expenses				119,900

				146,100
Other gains (losses)
Gain on sale of equipment				2,600

Income before taxes				148,700
Income taxes expense				59,480

Net income			$	89,220

a. A $28,000 note payable is retired at its $28,000 carrying (book) value in exchange for cash.

b. The only changes affecting retained earnings are net income and cash dividends paid.

c. New equipment is acquired for $63,800 cash.

d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,600 gain.

e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f. All purchases and sales of inventory are on credit.

IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2015
Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash



Changes in current operating assets and liabilities







		$0
Cash flows from investing activities



		0
Cash flows from financing activities




		0
Net increase (decrease) in cash		$0
Cash balance at prior year-end
Cash balance at current year-end		$0

Cash Flow on Total Assets Ratio
Choose Numerator:	/	Choose Denominator:	=	Cash Flow on Total Assets Ratio
	/		=	Cash flow on total assets ratio
	/		=

(2) Compute the company's cash flow on total assets ratio for its fiscal year 2015.

copperwildebeest615

ACCT1101 Lecture 9: L9

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