ACTG 2200 Lecture Notes - Lecture 3: Cash Flow Statement, Petty Cash, Money Market

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purplecicada511

4 Feb 2017

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What came in and what went out. Revenues and expenses: changes in current assets and liabilities. Changes in current liabilities: ex: sell goods for cash. Investing: property plant equipment, investments, changes in long term assets, ex: buy equipment. Changes in retained earnings: ex: selling common stock. Taking what happens at the beginning to the end, and recording it on the statement of cash flows sheet. Inflows: sale of goods/services, receipt of interest and dividends. Outflows: purchase of inventory, for operating expenses, for interest, for income taxes. Inflows: sale of investments, sale of long-term assets, collection of notes receivable. Significant investing and financing activities that do not affect cash. Reported after cash flow statement or in a note to the financial statements. Ex: buying stock for equipment not direct cash. Ex: equipment was purchased for ,000 by issuing a note payable for ,000. But don"t note this in cash flows because no cash was exchanged.

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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

Kennedy, Inc. reported the following data:

Net income $127,659
Depreciation expense 16,038
Loss on disposal of equipment 11,080
Gain on sale of building 18,917
Increase in accounts receivable 7,995
Decrease in accounts payable 3,476
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. Use the minus sign to indicate cash outflows, a decrease in cash, cash payments, or any negative adjustments.

Kennedy, Inc.
Statement of Cash Flow

Cash flows from operating activities:
Net income
$
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense

Loss on disposal of equipment

Gain on sale of building

Changes in current operating assets and liabilities:
Increase in accounts receivable

Decrease in accounts payable

Net cash flow from operating activities

jaderaven672

Statement of Cash Flows Using A method of preparing the statement of cash flows that reconciles net income with net cash flows from operating activities.Indirect Method

For the year ending March 31, 20Y5, Omega Systems Inc. reported net income of $105,450 and paid dividends of $7,500. Comparative balance sheets as of March 31, 20Y5 and 20Y4, are as follows:

OMEGA SYSTEMS INC.
Balance Sheets
	March 31,		Changes Increase (Decrease)
	20Y5	20Y4	Changes Increase (Decrease)
Assets
Current assets:
Cash	$ 39,500	$ 29,250	$ 10,250
Accounts receivable	114,120	78,000	36,120
Inventory	126,550	117,550	9,000
Estimated Returns Inventory	6,600	5,000	1,600
Office supplies	4,255	4,435	(180)
Prepaid insurance	3,975	4,500	(525)
Total current assets	$ 295,000	$238,735	$ 56,265
Property, plant, and equipment:
Land	$ 30,000	$ 30,000	$ 0
Store equipment	350,000	285,000	65,000
Accumulated depreciationâstore equipment	(118,550)	(93,900)	(24,650)
Office equipment	23,355	15,000	8,355
Accumulated depreciationâoffice equipment	(7,080)	(3,345)	(3,735)
Total property, plant, and equipment	$ 277,725	$232,755	$ 44,970
Total assets	$ 572,725	$471,490	$101,235
Liabilities
Current liabilities:
Accounts payable	$ 24,630	$ 13,905	$ 10,725
Customer refunds payable	9,000	7,500	1,500
Notes payable (current portion)	7,500	7,500	0
Salaries payable	1,710	2,250	(540)
Unearned rent	2,700	3,600	(900)
Total current liabilities	$ 45,540	$ 34,755	$ 10,785
Long-term liabilities:
Notes payable (final payment due in eight years)	30,000	37,500	(7,500)
Total liabilities	$ 75,540	$ 72,255	$ 3,285
Stockholdersâ Equity
Common stock	$ 37,500	$ 37,500	$ 0
Retained earnings	459,685	361,735	97,950
Total stockholdersâ equity	$ 497,185	$399,235	$ 97,950
Total liabilities and stockholdersâ equity	$ 572,725	$471,490	$101,235

Instructions:

1. Prepare a statement of cash flows, using the indirect method. Enter account decreases, cash outflows, and the income statement effects that reduce net income as negative amounts.

Omega Systems Inc.

Statement of Cash Flows

For the Year Ended March 31, 20Y5

Cash flows from operating activities:

Net income

Depreciation expense-store equipment

Depreciation expense-office equipment

Changes in noncash current operating assets and liabilities:

Increase in accounts receivable

Increase in inventory

Increase in estimated returns inventory

Decrease in office supplies

Decrease in prepaid insurance

Increase in accounts payable

Increase in customer refunds payable

Decrease in salaries payable

Decrease in unearned rent

Net cash flows used for investing activities

Cash flows used for financing activities:

Payment of note payable

Payment of dividends

Net cash flows used for financing activities

Net increase in cash

April 1, 20Y4 cash balance

March 31, 20Y5 cash balance

scarletgnu53

ACTG 2200 Lecture Notes - Lecture 3: Cash Flow Statement, Petty Cash, Money Market

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