ACCT 1220 Lecture Notes - Lecture 19: Accounts Payable, Accrual, Deferral

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orchidtoad181

30 Mar 2017

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What the company did with the cash. Investing and financing transactions during the period, and the effect upon capital structure. Cash effects of transactions that create revenues and expenses that enter into determination of profit. Includes relevant non cash current assets and current liabilities on the statement of financial position. Where the related account is an income statement. Generally includes non-current asset items (e. g. , long-lived investments, property, plant and equipment) on the statement of financial. Obtaining cash from issuing debt and repaying the amounts borrowed. Obtaining cash from selling commons and preferred shares and paying dividends. Generally includes non-current liabilities and shareholder"s equity items. If it does not affect cash, do not report it in statement of cash flows. Report in separate note to the financial statements. Step 4: complete the statement of cash flows. Determine the net cash provided (used) by operating activities by converting profit from an accrual basis to a cash basis.

Related Questions

Choose the correction answer

15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.

T F

16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.

T F

17. Anobjective of the statement of cash flows is to

a. disclose changes during the period in all assetand all equity accounts.

b. disclose the change in working capital during theperiod.

c. provide information about the operating,investing, and financing activities of an entity during aperiod.

d. None of these answers are correct.

18. Theprimary purpose of the statement of cash flows is to provideinformation

a. about the operating, investing, and financingactivities of an entity during a period.

b. that is useful in assessing future cash flowprospects.

c. about the cash receipts and cash payments of anentity during a period.

d. about the entity's ability to meet itsobligations and to pay dividends.

19. Cash equivalents are

a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.

b. investments with original maturities of threemonths or less.

c. readily convertible into known amounts ofcash.

d. All of these answers are correct.

20. Xanthe Corporation had the following transactions occur in thecurrent year:

1. Cash sale of merchandise inventory.

2. Sale of delivery truck at book value.

3. Sale of Xanthe common stock for cash.

4. Issuance of a note payable to a bank forcash.

5. Sale of a security held as anavailable-for-sale investment.

6. Collection of loan receivable.

How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?

a. Five items

b. Four items

c. Three items

d. Two items

erinchimpanzee626

The 2016 and 2015 comparative balance sheets and 2016 incomestatement of Outdoor Supply Corp.â follow:

Outdoor Supply Corp.
Comparative Balance Sheets
	December 31,		Increase
	2016	2015	(Decrease)
Current assets:
Cash and cash equivalents	$65,300	$5,000	$60,300
Accounts receivable	47,700	42,500	5,200
Inventories	58,600	57,400	1,200
Prepaid expenses	1,700	4,800	(3,100)
Plant assets:
Land	59,000	21,900	37,100
Equipment, net	53,700	49,400	4,300
Total assets	$286,000	$181,000	$105,000
Current liabilities:
Accounts payable	$35,200	$27,800	$7,400
Salary payable	26,000	15,100	10,900
Other accrued liabilities	20,600	23,700	(3,100)
Long-term liabilities:
Notes payable	65,000	35,000	30,000
Stockholders' equity:
Common stock, no-par	89,100	66,400	22,700
Retained earnings	50,100	13,000	37,100
Total liabilities and stockholders' equity	$286,000	$181,000	$105,000

Outdoor Supply Corp.
Income Statement
Year Ended December 31, 2016
	Revenues:
		Sales revenue		$447,000
	Expenses:
		Cost of goods sold	$187,000
		Salary expense	76,200
		Depreciation expense	17,400
		Other operating expense	49,700
		Interest expense	24,700
		Income tax expense	28,600
		Total expenses		383,600
	Net income			$63,400

Outdoor Supply had no noncash investing and financingtransactions during 2016. During theâ year, there were no sales ofland orâ equipment, no payment of notesâ payable, no retirementsofâ stock, and no treasury stock transactions.

Requirements 1. Prepare the 2016 statement of cashâ flows,formatting operating activities by using the indirect method.

2. How will what you learned in this problem help you evaluateanâ investment?

(a) learn how operating activities, investing activities, andfinancing activities generate cash receipts and cash payments

(b) learn how companies prepare the statement of cash flows inorder to understand the meaning of cash flows from the 3 basiccategories of business activities

(d) none of the above

pucegerbil725

A fire destroyed your firmâs ending balance sheet and income statement after the year-end
but before the financial statements are released. However, you have been successful in obtaining the
numbers for the beginning balance sheet and the statement of cash flows, which are provided to you and
your team members in Excel format. Fields representing the missing balance sheet and income statement
are End of year2 in the Excel sheet

CONSOLIDATED BALANCE SHEETS (USD $)	End of year 2	End of year 1
In Thousands, unless otherwise specified	End of year 2	End of year 1
Current assets:
Cash and cash equivalents	ã	598
Receivables, net	ã	230
Inventories, net	ã	2309
Other current assets	ã	47
Total current assets	ã	3184
Property and equipment, net of accumulated depreciation	ã	1292
Assets held for sale	ã	1
Goodwill	ã	76
Intangible assets, net	ã	29
Other assets, net	ã	32
Assets, Total	ã	4614
Current liabilities:	ã	0
Current portion of long-term debt	ã	0
Accounts payable	ã	2030
Accrued expenses	ã	380
Other current liabilities	ã	150
Total current liabilities	ã	2560
Long-term debt	ã	604
Other long-term liabilities	ã	239
Commitments and Contingencies	ã	0
Stockholders Equity Attributable to Parent [Abstract]	ã	0
Preferred stock, nonvoting, $00001 par value	ã	0
Common stock, voting, $00001 par value	ã	0
Additional paid-in capital	ã	520
Treasury stock, at cost	ã	-27
Accumulated other comprehensive income (loss)	ã	3
Retained earnings	ã	715
Total stockholders equity	ã	1210
Liabilities and Stockholders Equity, Total	ã	4613


CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Year 2
Net sales	ã
Cost of sales, including purchasing and warehousing costs	ã
Gross profit	ã
Selling, general and administrative expenses	ã
Operating income	ã
Interest expense	ã
Other income, net	ã
Total other, net	ã
Income before provision for income taxes	ã
Provision for income taxes	ã
Net income	ã


CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
In Thousands, unless otherwise specified	Year 2
Cash flows from operating activities:
Net income	$392
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	208
Share-based compensation	13
Loss on property and equipment, net	1
Other	2
Provision for deferred income taxes	-2
Excess tax benefit from share-based compensation	-16
Increase Decrease in Operating Capital
Receivables, net	-32
Inventories, net	-204
Other assets	11
Accounts payable	113
Accrued expenses	63
Other liabilities	-4
Net cash provided by operating activities	545
Cash flows from investing activities:
Purchases of property and equipment	-196
Payments to Acquire Businesses, Gross	-186
Sale of certain assets of acquired business	19
Proceeds from sales of property and equipment	1
Net cash used in investing activities	-362
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	-3
Decrease in financed vendor accounts payable	0
Issuance of senior unsecured notes	449
Payment of debt related costs	-9
Borrowings under credit facilities	0
Payments on credit facilities	0
Dividends paid	-18
Proceeds from the issuance of common stock, primarily exercise of stock options	4
Tax withholdings related to the exercise of stock appreciation rights	-22
Excess tax benefit from share-based compensation	16
Repurchase of common stock	-81
Contingent payment accrued on acquisitions	5
Other	-1
Net cash provided by (used in) financing activities	331
Net increase (decrease) in cash and cash equivalents	514
Cash and cash equivalents, beginning of period	598
Cash and cash equivalents, end of period	1,112
Supplemental cash flow information:
Interest paid	35
Income tax payments	219
Non-cash transactions:
Accrued purchases of property and equipment	21
Retirement of common stock	0
Contingent consideration accrued on acquisitions	0
Changes in other comprehensive income	1
Declared but unpaid cash dividends	$4

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ACCT 1220 Lecture Notes - Lecture 19: Accounts Payable, Accrual, Deferral

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