ACCT20200 Chapter Notes - Chapter 11: Cash Flow, Treasury Stock, Current Asset

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periwinklechimpanzee451

28 Aug 2020

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Accountancy

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ACCT20200

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hums

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Statement of cash flows: summarizes the inflows and outflows of cash during the. Reports the operating, investing and financing net cash flows separately. Operating activities: cash receipts and payments for revenue and expense transactions. Generally relate to income statement and changes in current assets and liabilities. Investing activities: purchase and sale of long-term assets and current investment transactions. Financing activities: transactions with lenders (borrowing and repaying money) and stockholders (issue stock, pay dividends, purchase of treasury stock) Changes in long-term liabilities and stockholders equity. Noncash activities: significant investing and financing activities that don"t affect cash. Purchase of long-term assets by issuing debt or issuing stock. Conversion of bonds payable to common stock. Calculate net cash flows from operating activities. Determine net cash flows from investing activities. Determining net cash flows from financing activities. Combine all 3 cash flows and make sure this total equals the change in the amount of cash of the balance sheet between previous and current year.

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The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:

PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017
	2018		2017
Assets:
Current assets:
Cash	$	142,950	$	154,000
Accounts receivable		76,800		90,500
Inventory		92,000		77,300
Prepaid rent		3,400		1,700
Long-term assets:
Land		465,000		465,000
Equipment		762,000		655,000
Accumulated depreciation		(421,000)		(262,000)

Total assets	$	1,121,150	$	1,181,500

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	96,000	$	82,300
Interest payable		6,750		13,500
Income tax payable		7,400		4,700
Long-term liabilities:
Notes payable		112,500		225,000
Stockholders' equity:
Common stock		685,000		685,000
Retained earnings		213,500		171,000

Total liabilities and stockholders' equity	$	1,121,150	$	1,181,500

Additional Information for 2018:

1. Net income is $66,000.

2. The company purchases $107,000 in equipment.

3. Depreciation expense is $159,000.

4. The company repays $112,500 in notes payable.

5 .The company declares and pays a cash dividend of $23,500.

Required:

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities

Adjustments to reconcile net income to net cash flows from operating activities









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 at the beginning of the period
Cash at the end of the period

peachbee375

The balance sheet for Plasma Screens Corporation along with additional information, are provided below:

PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017
	2018		2017
Assets:
Current assets:
Cash	$	82,000	$	120,000
Accounts receivable		72,000		96,000
Inventory		65,000		80,000
Prepaid rent		5,000		4,000
Long-term assets:
Land		500,000		500,000
Equipment		800,000		600,000
Accumulated depreciation		(380,000)		(300,000)

Total assets	$	1,144,000	$	1,100,000

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	78,000	$	82,000
Interest payable		5,000		9,000
Income tax payable		9,000		7,000
Long-term liabilities:
Notes payable		75,000		150,000
Stockholders' equity:
Common stock		600,000		600,000
Retained earnings		377,000		252,000

Total liabilities and stockholders' equity	$	1,144,000	$	1,100,000

Additional Information for 2018:

1. Net income is $160,000.

2. The company purchases $200,000 in equipment.

3. Depreciation expense is $80,000.

4. The company repays $75,000 in notes payable.

5. The company declares and pays a cash dividend of $35,000.

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities:









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 at the beginning of the period
Cash at the end of the period

coraldeer142

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 ____________

ivorymallard438

ACCT20200 Chapter Notes - Chapter 11: Cash Flow, Treasury Stock, Current Asset

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