ACC 333 Lecture Notes - Lecture 3: Cash Flow Statement, Cash Flow, Current Liability

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orangeminnow913

3 Jan 2018

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Acc 340w3: cash balance - totals up aggregate cash flows to generate net cash flow from all activities for the period, then adds it to beginning balance of cash. Increase in a/r = cash not received (like a cash outflow) A/r (y2) = a/r (y1) + sales - collections re-arrange to determine collections: collections = a/r(y1) + sales - a/r(y2) M15b: cash flow statement - investing activities block investing. Objective is to disclose extent to which the business spends cash on and recovers cash from a variety of lt assets. 3 main categories of lt assets: ppt, intangible, investments in other companies. Remember that only cash amounts are reported in this block. Not as consistent from period to period as operating or some financing. These are cash outflows rather than inflows. M15c: cash flow statement - financing activities + cash.

Related Questions

Joyner Company's income statement for year 2 follows:

Sales 900,000

GOGS 500,000

Gross margin 400,000

Selling and administrative expense 328,000

Net operating income 72,000

Gain on sales of equipment 8,000

Income before taxes 80,000

Income taxes 24,000

Net income 56,000

It's balance sheet amounts at the end of years one and 2 areas follows:

Cash y2 4,000 y1 21,000

Acc rec y2 250,000 y1 170,000

Inventory y2 310,000 y1 260,000

Prepaid expense y2 7,000 y1 14,000

Total current assets y2 571,000 y1 465,000

Property, plant, and equipment y2 510,000 y1 400,000

Less accum. Dep. y2 132,000 y1 120,000

Net property, plant, and equipment y2 378,000 y1 280,000

Loan to Hymans company y2 40,000 y1 0

Total assets y2 989,000 y1 745,000

Accounts pay. Y2 310,000 y1 250,000

Accrued liabilities y2 20,000 y1 30,000

Income tax pay. Y2 45,000 y1 42,000

Total current liabilities y2 3750,000 y1 322,000

Bonds pay. Y2 190,000 y1 70,000

Total liabilities y2 565,000 y1 392,000

Common stock y2 300,000 y1 270,000

Retained earnings y2 124,000 y1 83,000

Total stockholders equity y2 424,000 y1 353,000

Total liabilities and stockholders equity y2 989,000 y1745,000

Equipment that had cost $40,000 and on which there wasaccumulated depreciation of $30,000 was sold during year 2 for$18,000. The company declared and paid a cash dividend during year2. It did not retire any bonds or repurchase any of its ownstock.

Required:

1. Using the indirect method, compute the net cash provided byoperating activities for year 2.

2. Prepare a statement of cash flow for year 2.

3. Compute the free cash flow for year 2

4. Briefly explain why cash declined so sharply during theyear.

Sorry about these values, this thing is kind of messed up. Ihope this can be understood.

The following is the Choco Companyâs balance sheet and incomestatement as of 12/31/2016.

Balance Sheet	2015	2016
Cash Accounts receivable Inventory Long-term investments Total assets Liabilities and stockholdersâ equity: (no value) Accounts payable Salary payable Bonds payable Common stock Retained earnings Total liabilities and stockholdersâ equity	$ 120,000 105,000 225,000 60,000 510,000 120,000 15,000 100,000 125,000 150,000 510,000	21,500 195,000 180,000 -0- 396,500 75,000 24,000 70,000 125,000 102,500 396,500
Income statement
Revenue:(no value) Sales Loss on sales of long-term investment Expenses: (no value) Cost of goods sold Salary expense Net income (loss)		560,000 (7,500) (375,000) (180,000) (2,500)

During 2016, following transactions were made:

Sold long-term investment for a loss of $7,500 (sold for$52,500).

$30,000 of bonds payable matured in 2016.

Paid cash dividends of $45,000.

What is the amount of cash inflow/outflow/ from their customers?(assume Sales are all credit sales)

What is the amount of cash inflow/outflow from the loss on thesales of long-term investment?

What is the amount of cash inflow/outflow from theirsuppliers?

What is the amount of cash inflow/outflow from theiremployees?

What is the amount of cash inflow/outflow from their long-terminvestment?

What is the amount of cash inflow/outflow regarding the maturityof their bonds payable?

What is the amount of cash inflow/outflow regarding the cashdividends?

Using the above balance sheet, income statement and informationfrom a to g, prepare the entire cash flow statement using thedirect method.

Choco Company Statement of Cash Flows For the year ended December 31, 2016
Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities
Cash flows from investing activities: Net cash flows from investing activities
Cash flows from financing activities: Net cash flows from financing activities
Cash balance, 12/31/2016

browncamel370

The comparative balance sheet of Cromme Inc. for December 31,2016 and 2015, is shown as follows:

Question not attempted.

1		Dec. 31, 2016	Dec. 31, 2015
2	Assets
3	Cash	$626,640.00	$585,760.00
4	Accounts receivable (net)	226,900.00	208,390.00
5	Inventories	641,350.00	616,130.00
6	Investments	0.00	239,300.00
7	Land	328,730.00	0.00
8	Equipment	705,940.00	553,530.00
9	Accumulated depreciation-equipment	(166,970.00)	(148,000.00)
10	Total assets	$2,362,590.00	$2,055,110.00
11	Liabilities and Stockholdersâ Equity
12	Accounts payable (merchandise creditors)	$425,140.00	$404,540.00
13	Accrued expenses payable (operating expenses)	42,020.00	52,750.00
14	Dividends payable	23,580.00	19,500.00
15	Common stock, $4 par	154,000.00	100,000.00
16	Paid-in capital: Excess of issue price over parâcommon stock	416,600.00	279,400.00
17	Retained earnings	1,301,250.00	1,198,920.00
18	Total liabilities and stockholdersâ equity	$2,362,590.00	$2,055,110.00

Additional data obtained from an examination of the accounts inthe ledger for 2016 are as follows:

A.	The investments were sold for $279,880 cash.
B.	Equipment and land were acquired for cash.
C.	There were no disposals of equipment during the year.
D.	The common stock was issued for cash.
E.	There was a $198,010 credit to Retained Earnings for netincome.
F.	There was a $95,680 debit to Retained Earnings for cashdividends declared.

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities

The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income.

. Refer to the Labels and Amount Descriptions list provided forthe exact wording of the answer choices for text entries. Be sureto complete the heading of the statement. In the operatingactivities section, use the minus sign to indicate cash outflows,decreases in cash and a net cash outflow, if required. In theinvesting and financing activities section, use a minus sign onlyto indicate a NET cash outflow for the section.

Labels

In CengageNOW, a Label is a text entry that does not have anamount associated with it.

and Amount Descriptions

In CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it.

Cash paid for dividends

Cash paid for merchandise

Cash paid for purchase of equipment

Cash paid for purchase of land

Cash received from customers

Cash received from sale of common stock

Cash received from sale of investments

December 31, 2016

Decrease in accounts payable

Decrease in accounts receivable

Decrease in accrued expenses payable

Decrease in inventories

Decrease in cash

Depreciation

For the Year Ended December 31, 2016

Gain on sale of investments

Increase in accounts payable

Increase in accounts receivable

Increase in accrued expenses payable

Increase in cash

Increase in inventories

Loss on sale of investments

Net cash flow from operating activities

Net cash flow used for operating activities

Net cash flow from investing activities

Net cash flow used for investing activities

Net cash flow from financing activities

Net cash flow used for financing activities

Net income

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities

The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income.

Question not attempted.

Cromme Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow fromoperating activities:
4
5
6	Changes in current operating assets and liabilities:
7
8
9
10
11
12
13	Cash flows from investing activities:
14
15
16
17
18
19	Cash flows from financing activities:
20
21
22
23
24	Cash at the beginning of the year
25	Cash at the end of the year

scarletkoala290

ACC 333 Lecture Notes - Lecture 3: Cash Flow Statement, Cash Flow, Current Liability

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