ACCT 203 Lecture 4: Class note 4
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Erroneous Statement of Cash Flows
Ryan Company's bookkeeper prepared the following 2016 statement of cash flows:
| Flows of Cash Statement December 31, 2016 | |||
| Sources (Inflows) of Cash | |||
| Net Source from Operations | |||
| Net income | $47,800 | ||
| Add: Cash receipt from sale of land | 6,500 | ||
| Inflow from issuing 10% bonds payable | 25,000 | ||
| Depreciation expense | 13,200 | ||
| Reduction in inventory | 1,900 | ||
| Less: Outflow to buy equipment | (16,400) | ||
| Increase in prepaid expenses | (700) | ||
| Cash (principal) paid on long-term note | (9,500) | ||
| ordinary gain | (2,000) | ||
| Total source from operations | $65,800 | ||
| Other Sources (Inflows) of Cash | |||
| Loss on sale of land | $2,300 | ||
| Increase in accounts payable | 1,000 | ||
| Cash from issuing preferred stock | 38,700 | ||
| Patent amortization expense | 2,100 | ||
| Total other sources of cash | 44,100 | ||
| Sources (Financing) Not Affecting Cash | |||
| Issuance of common stock for patent | 11,000 | ||
| Total inflows of cash | $120,900 | ||
| Uses (Outflows) of Cash | |||
| To purchase building | $(62,000) | ||
| Increase in accounts receivable | (7,800) | ||
| For acquiring marketable securities | (7,100) | ||
| Decrease in income taxes payable | (1,400) | ||
| Total uses of cash | (78,300) | ||
| Uses (Investing) Not Affecting Cash | |||
| Acquisition of patent by issuing common stock | (11,000) | ||
| Net inflow before dividends | $ 31,600 | ||
| Less: Cash dividends | (24,000) | ||
| Net increase in cash | $7,600 | ||
| Cash, January 1, 2016 | 15,300 | ||
| Cash, December 31, 2016 | $22,900 | ||
After a thorough investigation, you have determined that the amounts of the items listed on the statement are correct. However, you notice several items that are incorrectly classified and reported.
Required
Prepare a corrected 2016 statement of cash flows for the Ryan Company. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.
Operating Activities
________________ __________
Adjustment for non cash income items:
________________ __________
________________ __________
________________ __________
________________ __________
Adjustments for cash flow effects from working capital items:
________________ __________
________________ __________
________________ __________
________________ __________
________________ __________
Net cash provided by operating activities ____________
Investing Activities:
________________ __________
________________ __________
________________ __________
________________ __________
Net cash used for investing activities _________
Financing Activities:
________________ __________
________________ __________
________________ __________
________________ __________
Net cash provided by financing activies _________
Net increase in cash _________
Cash, january 1, 2016 _________
Cash, december 31, 2016 _________
Investing and Financing Activities not Affecting Cash
Investing Activities:
Acquistion of patent by issuing commons stock ______________
Financing Activities:
Issuance of common stock for patent ____________
Natalie Daniels has completed the basic format to be used inpreparing the statement of cash flows (indirect method) for CPUHardware Designers. All amounts are in thousands (000s). |
| CPU HARDWARE DESIGNERS Statement of Cash Flows For the year ended December 31, 2015 | ||
| Cash Flows fromOperating Activities | ||
| Netincome | ||
| Adjustments for noncash effects: | ||
| Changesin current assets and current liabilities: | ||
| Net cash flows from operatingactivities | ||
| Cash Flows fromInvesting Activities | ||
| Netcash flows from investing activities | ||
| Cash Flows fromFinancing Activities | ||
| Net cash flows from financingactivities | ||
| Net increase(decrease) in cash | $ | (28,000) |
| Cash at thebeginning of the period | 90,000 | |
| Cash at the end ofthe period | $ | 62,000 |
Below, in random order, are line items to be included in thestatement of cash flows. |
| Cash received fromthe sale of land | $ 4,000 |
| Issuance of commonstock | 300,000 |
| Depreciationexpense | 30,000 |
| Increase in accountsreceivable | 70,000 |
| Increase in accountspayable | 11,000 |
| Loss on sale ofland | 8,000 |
| Purchase ofequipment | 230,000 |
| Increase ininventory | 40,000 |
| Increase in prepaidrent | 11,000 |
| Payment ofdividends | 50,000 |
| Net income | 80,000 |
| Repayment of notespayable | 60,000 |
| Required: |
Prepare the statement of cash flows for CPU Hardware Designersusing the indirect method. (List cash outflows and any decrease in cashas negative amounts. Enter your answers inthousands.) |
| CPU HARDWARE DESIGNERS | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 2015 | ||
| Cash Flows from Operating Activities: | ||
| Adjustments to reconcile net income to net cash flows fromoperating activities | ||
| Net cash flows from operating activities | $0 | |
| Cash Flows from Investing Activities: | ||
| Net cash flows from investing activities | 0 | |
| Cash Flows from Financing Activities: | ||
| Net cash flows from financing activities | 0 | |
| Cash at the beginning of the period | ||
| Cash at the end of the period | $0 | |
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 | |
