Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 4PB
Preparing and Interpreting a Statement of Cash Flows (Indirect Method)
Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement are presented below. Additional information is presented on the following page.
| Current Year | Previous Year | |
| Balance Sheet at December 31 | ||
| Cash | $ 3,200 | $4,000 |
| Accounts Receivable | 1,000 | 500 |
| Prepaid Rent | 100 | 50 |
| $ 4,300 | $4,550 | |
| Salaries and Wages Payable | $ 350 | $1,100 |
| Common Stock | 1,200 | 1,000 |
| Retained Earnings | 2,750 | 2,450 |
| $ 4,300 | $4,550 | |
| Income Statement | ||
| Service Revenue | $33,950 | |
| Salaries and Wages Expense | 30,000 | |
| Rent and Office Expenses | 3,650 | |
| Net Income | $ 300 |
Additional Data:
- a. Rent is paid in advance each month, and Office Expenses are paid in cash as incurred.
- b. An owner contributed capital by paying $200 cash in exchange for the company’s stock.
Required:
- 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method.
- 2. Use the statement of cash flows to evaluate the company’s cash flows.
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Preparation of SCF for a Single Proprietorship
Instructions:
Prepare a Statement of Cash Flows for the year ended December 31,2020 the using the following account titles listed.
Use the Direct Method.
You may use any desired business name.
Use the space provided for your answer.
Cash from Clients – 450,000
Cash Payment for merchandise – 410,500
Cash receipt from additional investment of owner – 114,450
Cash receipt from sale of equipment - 15,000
Cash withdrawal by the owner – 80,000
Cash, January 1, 2020 - 120,000
Credit sales – 35,000
Depreciation expense – 15,410
Paid loan from a bank - 111,000
Payment to interest expense – 10,000
Payment to suppliers – 20,000
Payment to utilities – 30,000
Payments to Employees – 14,800
ccClassify each cash transaction between Operating (O), Investing (I), or Financing (F) activities using the following data:
__Cash at the beginning of the year: $650,000
Cash Receipts from:
__Bank (Interest on CD) $6,000
__Customers Sales $872,000
__Interest $33,000
__Dividends $3,600
Cash payments for:
__Dividends $2,500
__Raw Materials $ 3,800
__Wages Expense $4,000
__Land $10,000
__Interest $4,000
Determining Cash Flows from Financing Activities
Solomon Construction Company reported the following amount on its balance sheet for notes payable:
Jan. 1
Dec. 31
Notes payable
$120,000
$200,000
Required:
1. If Solomon did not repay any notes payable during the year, determine how much cash Solomon received from the issuance of notes payable.$fill in the blank 1
2. If Solomon repaid $40,000 of notes payable during the year, determine what amounts Solomon would report in the financing activities section of the statement of cash flows.
Payment of notes payable
$fill in the blank 2
Issuance of notes payable
$fill in the blank 3
Chapter 12 Solutions
Fundamentals Of Financial Accounting
Ch. 12 - Compare the purposes of the income statement, the...Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - What are the major categories of business...Ch. 12 - Prob. 5QCh. 12 - Describe the types of items used to compute cash...Ch. 12 - Under the indirect method, depreciation expense is...Ch. 12 - Prob. 8QCh. 12 - Explain why a 50,000 increase in inventory during...Ch. 12 - Prob. 10Q
Ch. 12 - As a junior analyst, you are evaluating the...Ch. 12 - Prob. 12QCh. 12 - Prob. 13QCh. 12 - Prob. 14QCh. 12 - (Supplement 12A) How is the sale of equipment...Ch. 12 - Prob. 1MCCh. 12 - Prob. 2MCCh. 12 - Prob. 3MCCh. 12 - Prob. 4MCCh. 12 - Which of the following would not appear in the...Ch. 12 - Prob. 6MCCh. 12 - Prob. 7MCCh. 12 - Prob. 8MCCh. 12 - The total change in cash as shown near the bottom...Ch. 12 - Prob. 10MCCh. 12 - Prob. 1MECh. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Determining the Effects of Account Changes on Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 5MECh. 12 - Computing Cash Flows from Investing Activities...Ch. 12 - Computing Cash Flows from Financing Activities...Ch. 12 - Computing Cash Flows Under IFRS Using the data...Ch. 12 - Prob. 9MECh. 12 - Interpreting Cash Flows from Operating, Investing,...Ch. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 13MECh. 12 - Matching items Reported to Cash Flow Statement...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Reporting and Interpreting Cash Flows from...Ch. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Inferring Balance Sheet Changes from the Cash Flow...Ch. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - Prob. 18ECh. 12 - Prob. 19ECh. 12 - Prob. 20ECh. 12 - Prob. 21ECh. 12 - Prob. 22ECh. 12 - (Supplement 12B) Preparing a Statement of Cash...Ch. 12 - Determining Cash Flow Statement Effects of...Ch. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5CPCh. 12 - Prob. 6CPCh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 6PACh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5PBCh. 12 - Prob. 6PBCh. 12 - Prob. 1SDCCh. 12 - Prob. 2SDCCh. 12 - Prob. 6SDCCh. 12 - Prob. 7SDCCh. 12 - Prob. 8SDCCh. 12 - Prob. 9SDCCh. 12 - Prob. 1CC
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