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Lecture 12

COMMERCE 1AA3 Lecture Notes - Lecture 12: Deferral, Retained Earnings

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Department
Commerce
Course Code
COMMERCE 1AA3
Professor
Emad Mohammad
Lecture
12

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The Direct Method
1. Collections from Customers
Collections = Beg. A/R + Revenues Ending A/R
2. Payments to Suppliers
Purchases = End. Inv. + COGS Beg. Inv.
Payments = Beg. A/P + Purchases End. A/P
3. Payments fro Operating Expenses
Payments for Operating Expenses = Operating Expenses + Changes in
Prepaid expenses Changes in accrued liabilities
4. Payments for Income Taxes and Interest
Payments for Interest = Beg. Int. Payable + Interest Expense Ending
Interest Payable
Property, Plant and Equipment (net)
Beg. Balance + Acquisitions Depreciation Carrying Amount of Assets
Sold = End. Balance
Sales Proceeds = Carrying Amount of Assets Sold + Gain Loss
Investments
Beg. Balance + Purchases Carrying Amount of Investments Sold = End.
Balance
Notes Receivable
Beg. Balance + New Loans Made Collections = End. Balance
Long-Term Debt
Beg. Balance + Borrowing of New Debt Repayments of Debt = End
Balance
Common Shares
Beg. Balance + Issuance of New Shares Repurchase of Shares = End.
Balance
Retained Earnings
Beg. Balance + Net Income Dividends Declared = End. Balance
Loss on Sale = Net Book Value Selling Price
*Net Book Value = Historical Cost Accumulated Amortization
Change in Accumulated Amortization = Amortization Expense
Accumulated Amortization of Sold Asset
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