FIN 300 Chapter Notes - Chapter 3: Root Mean Square, Asset Turnover

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bronzepig36

25 Jan 2017

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Sources of cash: a rms activities that generate cash. Uses of cash: a rms activities in which cash is spent. What we need to do is trace the changes in the rms statement of nancial position to see how he rm obtained its cash and how the rm spent its cash during some time period. An increase in a left hand side (asset) account or a decrease in a right had side (liability or equity) is a use of cash. A decrease in an asset account or an increase in a liability/ equity account is a source of cash. Net addition: the difference between the sources and uses of cash. Statement of cash flows: a rms nancial statement that summarizes it sources and uses of cash over a speci ed period. You group all the activities into one of three categories: operating activities, nancing activities, and investment activities.

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P12-5 (Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method) LO12-2, 12-4, 12-6

XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the
statement of cash flows. The completed comparative balance sheets and income statement are summarized:

		2014	2013
	Balance sheet at December 31
	Cash	$ 34,000	$ 29,000
	Accounts receivable	35,000	28,000
	Merchandise inventory	41,000	38,000
	Property and equipment	121,000	100,000
	Less: Accumulated depreciation	(30,000)	(25,000)

		$ 201,000	$ 170,000

	Accounts payable	$ 36,000	$ 27,000
	Wages payable	1,200	1,400
	Note payable, long-term	38,000	44,000
	Contributed capital	88,600	72,600
	Retained earnings	37,200	25,000

		$ 201,000	$ 170,000

	Income statement for 2014
	Sales	$ 120,000
	Gain on sale of equipment	1,000
	Cost of goods sold	70,000
	Other expenses	38,800

	Net income	$ 12,200

Additional Data:
a.	Bought equipment for cash, $31,000.
	Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash.
b.	Paid $6,000 on the long-term note payable.
c.	Issued new shares of stock for $16,000 cash.
d.	No dividends were declared or paid.
e.	Other expenses included depreciation, $12,000; wages, $13,000; taxes, $6,000; and other, $7,800.
f.	Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses,
	assume that these expenses were fully paid in cash.

Required:
1	Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method.
	(List cash outflows as negative amounts.)
	Possible input areas are shaded.

	XS SUPPLY COMPANY
	Statement of Cash Flows
	For the Year Ended December 31, 2014
	Cash flows from operating activities:

	Adjustments to reconcile net income to net cash provided by operating activities:






			-
	Net cash provided by operating activities		-
	Cash flows from investing activities:



			-
	Cash flows from financing activities:



			-


			$ -

ultramarineworm842

Using the Compresensive Annual Financial Report found at https://dwuconsulting.com/images/CAFR/AUS%202014%20City%20CAFR.pdf please answer the following:

1. Indicate the activities accounted for in both internal service funds and major enterprise funds. Comment on whether any of these activities could also have been accounted for in a general or other govern- mental fund.
2. How are the internal service fund activities reported in the government-wide statement of net position? How are they reported in the proprietary funds statement of net position?
3. Did any of the internal service funds report significant operating surpluses or deficits for the year? Were any accumulated significant net asset balances over the years not invested in capital assets?
4. Were any of the governmentâs enterprise funds âprofitableâ during the year? If so, what has the government done with the âearningsâ? Has it transferred them to the general fund?
5. Does the government have revenue bonds outstanding that are related to business-type activities? If so, for what activities?
6. Do the financial statements include a statement of cash flows for proprietary funds? Is the statement on a direct or an indirect basis? In how many categories are the cash flows presented? Which of these categories resulted in net cash inflows? Which resulted in net cash outflows?
7. What was the total operating income? What was total net cash provided by operating activities? What accounts for the largest difference between these two amounts?
8. Has the city entered into any service concession arrangements? Which specific ones, and why?

scarlettermite470

1. We are trying to reduce our debt. How would you recommend modifying the cash flow (increase or decrease) in each of the three activities: (1) operating activities, (2) investing activities, and (3) financing activities? Explain. 2. We are trying to improve our operations by increasing cash flow in one of the three activities: (1) operating activities, (2) investing activities, or (3) financing activities. Which one of the three activities would you recommend, and why? Account name
CASH FLOWS FROM OPERATING ACTIVITIES	2017 Q3	2017 Q2	2017 Q1
Net income	$ 121,234.00	$ 73,739.00	$ 28,744.00
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	$ 9,215.00	$ 6,120.00	$ 3,070.00
Loss (gain) on disposal of assets	$ 32.00	$ 4.00	_
Provision for bad debts, net	$ 1,796.00	$ 916.00	$ 561.00
Non-cash stock compensation and other charges	$ 20,369.00	$ 6,809.00	$ 3,681.00
Non-cash interest and other (income) loss	$ (451.00)	$ (274.00)	$ (301.00)
Deferred income taxes	$ 44,777.00	$ (1,446.00)	$ (1,900.00)
Equity in net losses from unconsolidated joint ventures, less distributions received	$ 4,278.00	$ 3,543.00	$ 2,386.00
Changes in assets and liabilities, net of acquisition
Receivables	$ (47,520.00)	$ (40,673.00)	$ (11,365.00)
Advances to/from marketing and reservation system activities, net	$ 43,697.00	$ 17,407.00	$ (216.00)
Forgivable notes receivable, net	$ (21,443.00)	$ (14,108.00)	$ (4,483.00)
Accounts payable	$ 19,679.00	$ 18,955.00	$ 9,203.00
Accrued expenses and other current liabilities	$ (11,540.00)	$ (11,286.00)	$ (25,048.00)
Income taxes payable/receivable	$ (20,114.00)	$ 5,629.00	$ 13,012.00
Deferred revenue	$ 3,650.00	$ 2,061.00	$ 12,579.00
Other assets	$ (1,162.00)	$ (1,764.00)	$ (4,958.00)
Other liabilities	$ (1,578.00)	$ (1,524.00)	$ (751.00)
Net cash provided by operating activities	$ 165,019.00	$ 64,108.00	$ 24,214.00

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment	$ (17,514.00)	$ (10,687.00)	$ (4,718.00)
Investment in intangible assets	$ (2,376.00)	$ (2,228.00)	$ (2,088.00)
Proceeds from sales of assets	_	_
Business acquisition, net of cash acquired	_	_
Contributions to equity method investments	$ (44,876.00)	$ (42,127.00)	$ (31,610.00)
Distributions from equity method investments	$ 4,307.00	$ 1,696.00	$ 501.00
Purchases of investments, employee benefit plans	$ (2,140.00)	$ (1,736.00)	$ (1,424.00)
Proceeds from sales of investments, employee benefit plans	$ 2,150.00	$ 2,084.00	$ 843.00
Issuance of mezzanine and other notes receivable	$ (18,565.00)	$ (14,977.00)	$ (9,863.00)
Collections of mezzanine and other notes receivable	$ 630.00	$ 552.00	$ 522.00
Acquisitions of real estate	_
Other items, net	$ 109.00	$ 110.00	$ (4.00)
Net cash used by investing activities	$ (78,275.00)	$ (67,303.00)	$ (47,832.00)

CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments) borrowings pursuant to revolving credit facilities	$ (39,974.00)	$ 23,200.00	$ 22,800.00
Principal payments on long-term debt	$ (484.00)	$ (309.00)	$ (153.00)
Purchases of treasury stock	$ (8,887.00)	$ (7,414.00)	$ (7,271.00)
Dividends paid	$ (36,483.00)	$ (24,333.00)	$ (12,139.00)
Debt issuance costs	_
Proceeds from transfer of interest in notes receivable	$ 24,237.00	$ 23,200.00	_
Proceeds from exercise of stock options	$ 9,799.00	$ (309.00)	$ 4,963.00
Net cash used by financing activities	$ (51,792.00)	$ (2,266.00)	$ 8,200.00
Net change in cash and cash equivalents	$ 34,952.00	$ (5,561.00)	$ (15,418.00)
Effect of foreign exchange rate changes on cash and cash equivalents	$ 1,433.00	$ 955.00	$ 427.00
Cash and cash equivalents at beginning of period	$ 202,463.00	$ 202,463.00	$ 202,463.00
Cash and cash equivalents at end of period	$ 238,848.00	$ 197,957.00	$ 187,472.00
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Income taxes, net of refunds	$ 31,254.00	$ 30,813.00	$ 1,454.00
Interest, net of capitalized interest	$ 41,119.00	$ 21,206.00	$ 19,874.00
Non-cash investing and financing activities:
Dividends declared but not paid	$ 12,167.00	$ 12,133.00	$ 12,195.00
Investment in property and equipment acquired in accounts payable	$ 758.00	$ 895.00	$ 724.00
Non-cash sale of investment of unconsolidated joint venture	_	_	_

FIN 300 Chapter Notes - Chapter 3: Root Mean Square, Asset Turnover

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