ACCT 305 Lecture Notes - Lecture 23: Cash Flow, Net Income, Income Statement

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14 Apr 2020

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Primary purpose: to provide information about a company"s cash receipts and cash payment during a period. Secondary objective: to provide cash-basis information about the company"s operating, investing, and financing activities. Classification of cash flows: operating activities -> income statement transactions, cash inflows: From returns on loans (interest) and on equity securities (dividends: cash outflows: To others for expenses: investing activities -> changes in investments and long-term asset items, cash inflows: From sale of debt or equity securities of other entities. From collection of principle on loans to other entities: cash outflows: To purchase debt or equity securities of other entities. To make loans to other entities: financing activities -> changes in long-term liabilities & stockholders" equity, cash inflows: From issuance of debt (bonds and notes: cash outflows: To redeem long-term debt or reacquire capital stock. **generally, only investments with original maturities of three months or less qualify under this definition.

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The Blackbeard Company Ltd provided the following information in regard to its operations for the year ended 30 June 2014:

Cash Book Summary
Opening balance	$20,000	Accounts Payable	$40,000
Accounts receivable	100,000	Bills Payable (suppliers)	20,000
Bills Receivable (suppliers)	20,000	Interest paid	60,000
Debenture Issue	400,000	Operating expenses	180,000
Dividends received	20,000	Salaries & wages	200,000
Interest received	40,000	Current tax payable	80,000
Motor vehicles	60,000	Plant & machinery	100,000
Share capital	200,000	Dividend paid	120,000
		Balance c/d	60,000
	860,000		860,000
Balance b/d	60,000

Required:

(a) Net cash used in operating activities; (b) Net cash used in investing activities; (c) Net cash from financing activities;

(d) Net increase/(decrease) in cash and cash equivalents.

Please use the following format

*Statement of Cash Flows for Blackbeard Company*
*For the Financial Year Ended 30 June 2014*
( i ) Cash flows from Operating Activities	Inflows/	Inflows/
	(Outflows)	(Outflows)










Net cash used in operating activities

( ii ) Cash flows from Investing Activities


Net cash used in Investing Activities

( iii ) Cash flows from Financing Activities

violetcoyote644

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

mauvesnail91

The following transactions pertain to the operations of BlairCompany for 2014:

Acquired $22,500cash from the issue of common stock.

Performedservices for $36,500 cash.

Paid a $29,200cash advance for a one-year contract to rent equipment.

Recognized$32,200 of accrued salary expense.

Accepted a$2,200 cash advance for services to be performed in thefuture.

Provided $17,150of services on account.

Incurred $9,750of other operating expenses on account.

Collected $5,200cash from accounts receivable.

Paid a $8,900cash dividend to the stockholders.

10.

Paid $17,800 cash on accounts payable.

Required
a.	Classify the cashflows from these transactions as operating activities (OA),investing activities (IA), or financing activities (FA). Use NA fortransactions that do not affect the statement of cash flows.

Prepare a statement ofcash flows. (There is no beginning cash balance.) (Amountsto be deducted should be indicated with a minus sign.)

BLAIRCOMPANY
Statement ofCash Flows
For the YearEnded December 31, 2014
Cash flowsfrom operating activities






Net cash flowfrom operating activities
Cash flowsfrom investing acivities
Cash flowsfrom financing activities



Net cash flowfrom financing activities
Net change incash

Ending cash balance

ACCT 305 Lecture Notes - Lecture 23: Cash Flow, Net Income, Income Statement

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