ACCT 1A Lecture Notes - Lecture 14: Cash Flow, Deferred Income, Accounts Payable

7 views3 pages

magentamuskrat366

9 Aug 2020

School

Irvine Valley College

Department

Accounting

Course

ACCT 1A

Professor

urell

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

Document Summary

Productive assets and depreciation: effect on statement of cash flows. Revenues and expenses that do not affect cash and gains and losses that relate to. Depreciation expense is a non-cash expense and is subtracted from revenues in investing or financing activities (not operations) should be eliminated calculating net earnings, it must be added back to net earnings to eliminate its effect. Gains and losses on disposal of long-lived assets represent the difference. Businesses finance the acquisition of their assets from two sources: funds supplied by creditors (debt) and funds provided by owners (equity) Capital structure: the mixture of debt and equity used by a business to finance its short and long-term operating requirements. In deciding how best to finance its projects, company management must consider two key factors: the financial risk associated with the source of financing and the cost.

Related Questions

IKIBAN INC. Comparative Balance Sheets June 30, 2015 and 2014
	2015			2014
Assets
Cash	$	96,500		$	56,200
Accounts receivable, net		69,300			51,400
Inventory		66,600			96,800
Prepaid expenses		5,100			6,400

Total current assets		237,500			210,800
Equipment		135,200			120,000
Accum. depreciationâEquipment		(28,900	)		(10,500	)

Total assets	$	343,800		$	320,300

Liabilities and Equity
Accounts payable	$	26,900		$	32,200
Wages payable		7,100			16,700
Income taxes payable		2,500			4,100

Total current liabilities		36,500			53,000
Notes payable (long term)		42,000			70,000

Total liabilities		78,500			123,000
Equity
Common stock, $5 par value		240,000			189,000
Retained earnings		25,300			8,300

Total liabilities and equity	$	343,800		$	320,300

IKIBAN INC. Income Statement For Year Ended June 30, 2015
Sales			$	673,000
Cost of goods sold				407,000

Gross profit				266,000
Operating expenses
Depreciation expense	$	53,000
Other expenses		66,900

Total operating expenses				119,900

				146,100
Other gains (losses)
Gain on sale of equipment				2,600

Income before taxes				148,700
Income taxes expense				59,480

Net income			$	89,220

a. A $28,000 note payable is retired at its $28,000 carrying (book) value in exchange for cash.

b. The only changes affecting retained earnings are net income and cash dividends paid.

c. New equipment is acquired for $63,800 cash.

d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,600 gain.

e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f. All purchases and sales of inventory are on credit.

IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2015
Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash



Changes in current operating assets and liabilities







		$0
Cash flows from investing activities



		0
Cash flows from financing activities




		0
Net increase (decrease) in cash		$0
Cash balance at prior year-end
Cash balance at current year-end		$0

Cash Flow on Total Assets Ratio
Choose Numerator:	/	Choose Denominator:	=	Cash Flow on Total Assets Ratio
	/		=	Cash flow on total assets ratio
	/		=

(2) Compute the company's cash flow on total assets ratio for its fiscal year 2015.

copperwildebeest615

EXERCISE 14-5 Net Cash Provided by Operating Activities (L014-2] Changes in various accounts and gains and losses on the sale of assets during the year for Argon Company are given below: Item Amount Accounts receivable .. Inventory ......... Prepaid expenses ........ Accounts payable ........ Accrued liabilities Income taxes payable ..... Sale of equipment ... Sale of long-term investments ........... $90,000 decrease $120,000 increase $3,000 decrease $65,000 decrease $8,000 increase $12,000 increase $7,000 gain $10,000 loss Required: Prepare an answer sheet using the following column headings: Item Amount Add Subtract For each item, place an X in the Add or Subtract column to indicate whether the dollar amount should be added to or subtracted from net income under the indirect method when computing the net cash provided by operating activities for the year.

Statement of Cash Flows
Angela's Cleaning Consortium			Seymour-Johnson, Inc.
Comparative Balance Sheet			Income Statement
December 31, 2020 and 2019			For the Year Ended December 31, 2020
	2020	2019	Net sales	$ 386,000
ASSETS			Cost of goods sold	(212,000)
Current assets			Gross profit	174,000
Cash	$ 66,500	$ 62,000	Operating expenses
Accounts receivable	95,000	113,000	Salaries and wages expense	(66,000)
Merchandise inventory	172,000	165,000	Depreciation expense	(25,000)
Total current assets	333,500	340,000	Other operating expenses	(28,000)
Long-term investments			Income from operations	55,000
Investment in Walking Dead Co.	-	50,000	Other revenues and gains
Property, buildings, and equipment	507,000	304,000	Interest revenue	15,000
Less: Accumulated depreciation	(59,500)	(42,000)	Dividend revenue	9,700
Total assets	$ 781,000	$ 652,000	Gain on disposal of plant assets	12,000
Liabilities and Stockholders' Equity			Other expenses and losses
Current liabilities			Interest expense	(15,000)
Accounts payable	$ 144,000	$ 175,000	Income before income taxes	76,700
Accrued liabilities	17,000	47,000	Income tax expense	(14,000)
Total current assets	161,000	222,000	Net Income	$ 62,700
Long-term Liabilities
Notes payable, long-term	160,000	90,000
Totalliabilities	321,000	312,000
Stockholders' equity
Common stock	370,000	250,000
Retained earnings	140,000	90,000
Treasury stock	(50,000)	-
TotalStockholdersâ Equity	460,000	340,000
Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000

Additional Information:
A. Sold plant assets with a cost of$75,000 and accumulated depreciation of $7,500,
yielding again of disposal of plant assets of $12,000.
B. Purchased plant assets by payingcash.
C. Issued Notes Payable for Cash.
D. Sold investment in Walking Dead Coat cost (zero gain/loss).
E. Issued Common Stock for Cash.
F. Purchased Treasury Stock for Cash.

Requirements:
Prepare, in good form, a Statement of Cash Flowsusing the indirect method.

beigesardine151

ACCT 1A Lecture Notes - Lecture 14: Cash Flow, Deferred Income, Accounts Payable

Document Summary

Get access

Related Documents

ACCT 1A Lecture Notes - Lecture 19: Capital Cost Allowance, Deferred Tax, Deferred Income

ACCT 1A Lecture Notes - Lecture 28: Retained Earnings, Current Liability, Accounts Payable

ACCT 1A Lecture Notes - Lecture 14: Cash Flow Statement, Retained Earnings, Cash Flow

Related Questions