ACCTG 101 Lecture Notes - Lecture 4: Accounting Equation, General Ledger, Cash Flow

10 views2 pages

ochrehornet578

7 Jul 2020

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

The same 3 steps are used in the preparation of a statement of cash flows using the indirect mehod. Cash is to a company what oil is to a car. Businesses generally go out of business not through lack of profitability but rather through lack of cash flow. Lack of cash will hamper growth, stop payment of wages and lead to a poor reputation with creditors. An account is an individual accounting record of increases and decreases in a specific asset, liability or equity item. Separate accounts are maintained for each item affected in an analysis of transactions. The rules for debits and credits provide a code or method for recording transactions. These rules ensure that the opposing effects of each transaction are recorded and therefore keep the accounting equation in balance. Every transaction must have equal debit and credit entries to keep the accounting equation in balance.

Related Questions

PROBLEM 14-11 Missing Data; Statement of Cash Flows (L014-1, L014-2] Yoric Company listed the net changes in its balance sheet accounts for the past year as follows: Credits > Debits by: Debits > Credits by: $ 17,000 110,000 $ 65,000 8,000 30,000 80,000 220,000 Cash ........ Accounts receivable .......... Inventory Prepaid expenses ......... Long-term loans to subsidiaries ... Long-term investments ... Plant and equipment ... Accumulated depreciation .......... Accounts payable .... Accrued liabilities ......................... Income taxes payable ..................... Bonds payable .......................... Common stock ................... Retained earnings ............ 5,000 32,000 9,000 16,000 400,000 170,000 50,000 $606,000 $606,000 The following additional information is available about last year's activities: a. Net income for the year was $ b. The company sold equipment during the year for $15,000. The equipment originally cost $50,000 and it had $37,000 in accumulated depreciation at the time of sale. Cash dividends of $20,000 were declared and paid during the year. d. The beginning and ending balances in the plant and Equipment and Accumulated Deprecia- tion accounts are given below: Plant and equipment ................. Accumulated depreciation ............. Beginning $1,580,000 $675,000 Ending $1,800,000 $680,000 e. The balance in the Cash account at the beginning of the year was $23,000; the balance at the end of the year was $ f. If data are not given explaining the change in an account, make the most reasonable assump- tion as to the cause of the change. Required: Using the indirect method, prepare a statement of cash flows for the year.

Yoric Company listed the netchanges in its balance sheet accounts for the past year asfollows:

	Debits > Credits by:		Credits > Debits by:
Cash	$	137,100
Accountsreceivable		170,100
Inventory			$	64,300
Prepaidexpenses		4,800
Long-term loans tosubsidiaries				81,000
Long-terminvestments		98,000
Plant andequipment		258,000
Accumulateddepreciation				65,200
Accountspayable				48,300
Accruedliabilities		5,000
Income taxespayable				9,800
Bonds payable				207,000
Common stock				122,000
Retainedearnings				75,400

	$	673,000	$	673,000

The following additionalinformation is available about last yearâs activities:

a.	Net income for the year was$ ? .
b.	The company sold equipmentduring the year for $35,500. The equipment originally cost $160,500and it had $126,500 in accumulated depreciation at the time ofsale.
c.	Cash dividends of $10,300 weredeclared and paid during the year.
d.	The beginning and endingbalances in the Plant and Equipment and Accumulated Depreciationaccounts are given below:

	Beginning	Ending
Plant and equipment	$ 2,939,000	$ 3,197,000
Accumulated depreciation	$ 986,100	$ 1,051,300

e.	The balance in the Cash accountat the beginning of the year was $109,400; the balance at the endof the year was $ ? .
f.	If data are not given explainingthe change in an account, make the most reasonable assumption as tothe cause of the change.

Required:

Using the indirect method, prepare a statement of cash flows forthe year. (List any deduction in cash and cash outflows asnegative amounts.)

lilacpanda639

P4 - 1 3
Positioning of items within cash flow statementâIFRS vs. U.S. GAAP (LO 4-9)

Lend Corp. has a primary business model of borrowing funds at low interest rates and lending
them out at higher interest rates. The balances in Lend Corporationâs balance sheet accounts at
December 31, 2017 are as follows:

Assets		Liabilities
cash	300,000		40,000
land	300,000		800,000
building	800,000
Accum depr: Building	160,000	Owner's Equity
A/R	20,000	Retained Earnings	320,000
Notes Rec	900,000	Contributed capital	1,000,000

During 2018, Lend Corp. has the following transactions:
â Received $45,000 in cash interest on notes receivable.
â Paid $16,000 of cash interest on notes payable.
â Collected $10,000 cash from accounts receivable.
â Paid $40,000 cash to reduce accounts payable.
â Owes $3,000 at the end of the year to administrative employees for work performed.
â Building depreciation is an additional $20,000.

Required:
1. Compute Lend Corpâs 2018 net income.
2. Show Lend Corpâs 12/31/2018 balance sheet.
3. Report Lend Corpâs 12/31/2018 statement of cash flows using the indirect method under
U.S. GAAP.
4. Report Lend Corpâs 12/31/2018 statement of cash flows using the indirect method under IFRS.
Record cash flows from interest received in the cash flows from investing section. Record cash
flows from interest paid in the cash flows from financing section.
5. Compare your net cash flows from operations computed from requirement 3 vs. require- ment 4.
Which do you think better reflects Lend Corpâs fundamental operating cash flows?

champagnespider277

ACCTG 101 Lecture Notes - Lecture 4: Accounting Equation, General Ledger, Cash Flow

Document Summary

Get access

Related Documents

ACCTG 101 Lecture Notes - Lecture 2: Income Statement, Financial Statement, Retained Earnings

ACCTG 101 Lecture Notes - Lecture 20: Cash Flow Statement, Cash Flow, Income Statement

ACCTG 101 Lecture Notes - Lecture 3: Financial Statement, Accounting Equation, General Ledger

Related Questions