Exam 19: Statement of Cash Flows

Tub Time Corp.'s policy is to report all cash flows arising from interest and dividends in the operating activities section.Tub Time's activities for the year ended December 31,2018 included the following: ∙ 2018's net income after taxes totaled $220,000. ∙ Declared and issued a stock dividend valued at $40,000. ∙ Accounts receivable decreased $44,000 in 2018. ∙ Sold a held-for-trading investment for $13,000.The book value was $11,000.(Assume this held-for-trading investment was not designated as a cash equivalent. ) ∙ Interest revenue for the period was $6,000.The interest receivable account decreased $4,000. ∙ Declared a $10,000 dividend payable.The dividends payable account decreased $19,000 in 2018. ∙ Sold an available-for-sale investment for $9,000.The book value was $14,000. ∙ Tub Time recorded a $15,000 goodwill impairment loss during the year. ∙ Depreciation expense for the year was $14,000. Required: a.Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. b.Identify how the activities listed above that are not operating activities would be required in the statement of cash flows.

What guidance does IFRS provide with respect to reporting bank overdrafts on the statement of cash flows?

Recon Cile Ltd.'s policy is to report all cash flows arising from interest and dividends in the operating section.Recon Cile's activities for the year ended December 31,2018 included the following: ∙ Sold a held-for-trading investment for $16,000.The book value of this investment,which was not designated as a cash equivalent,was $13,000. ∙ Purchased an available-for-sale investment for $20,000. ∙ Borrowed $25,000 from the bank for investment purposes. ∙ Sold equipment for $21,000 that originally cost $45,000.The net book value of this item at time of sale was $25,000. ∙ Purchased inventory costing $4,000 for cash. ∙ Received $6,000 in interest and $2,500 in dividends on sundry investments. ∙ Acquired a forklift costing $22,000 under a finance lease. ∙ Acquired land and buildings valued at $400,000 by issuing ordinary shares. ∙ Bought $300,000 in bonds at a discount,paying $285,000 cash. Required: a.Prepare the cash flows from investing activities section of the statement of cash flows. b.Identify how the activities listed above that are not investing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

The opening balance in the land account for Adara Corp for fiscal 2017 was $500,000;the closing balance was $610,000.During the year land costing $130,000 was given to a creditor in full settlement of a $152,000 loan.The fair value of the land at the time of the exchange was $152,000.The company also purchased a separate parcel of land for cash during the year. Required: a.Prepare the underlying journal entries to record the foregoing transactions and record events stemming from the transactions (e.g. ,the gain or loss on exchange of land for loan,etc. ). b.For each entry identify the cash flow effects,if any,under both the direct and indirect methods of presentation and classify the cash flow according to its nature. c.Why does the IASB require that companies classify cash flows as arising from operations,investing,or financing activities?

Katie Ltd.'s policy is to report all cash flows arising from interest and dividends in the operating section.Katie's activities for the year ended December 31,2018 included the following: ∙ Income tax expense for the year was $30,000. ∙ Sales for the year were $1,030,000. ∙ Accounts payable decreased $20,000 in 2018. ∙ Selling and administration expenses for the year totaled $240,000. ∙ Accounts receivable decreased $36,000 in 2018. ∙ Mamie's cost of goods sold in 2018 was $315,000. ∙ Mamie's inventory increased $13,000 during the year. ∙ Interest expense for the period was $12,000.The interest payable account increased $5,000. ∙ Dividends were not declared during the year;however,the dividends payable account increased $5,000. ∙ Sold an available-for-sale investment for $45,000.The book value was $52,000. ∙ Depreciation expense for the year was $19,000. Required: a.Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. b.Identify how the activities listed above that are not operating activities would be reported in the statement of cash flows.

Suzanne Inc.'s policy is to report all cash flows arising from interest and dividends in the operating activities section.The activities for the year ended December 31,2018 included the following: ∙ Interest revenue for the period was $12,000.The interest receivable account decreased $3,000. ∙ Sold an available-for-sale investment for $10,000.The book value was $5,000. Using the indirect method,how much would be presented as cash flow from operating activities?

Sherya Inc.'s policy is to report all cash flows arising from interest and dividends in the operating section.Sherya's activities for the year ended December 31,2018 included the following: ∙ Interest expense for the period was $10,000.The interest payable account decreased $4,000. ∙ Made a $110,000 principal payment on a bank loan. ∙ Declared a $15,000 cash dividend payable on January 15,2019. ∙ Declared and issued a stock dividend valued at $50,000. ∙ Paid $55,000 to repurchase ordinary shares and cancelled them.The book value was $40,000. ∙ Accounts payable increased $23,000 during the year. ∙ Issued $1,500,000 in bonds.The cash proceeds were $1,380,000. Required: a.Prepare the cash flows from financing activities section of the statement of cash flows. b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

What are financing activities?

Financial information for Fesone Inc.'s balance sheet for fiscal 2017 and 2018 follows: Additional information: 1.Preferred shares were converted to common shares during the year at their book value. 2.The face value of the bonds is $200,000;they pay a coupon rate of 6% per annum.The effective interest rate of interest is 8% per annum. 3.Net income was $290,000. 4.There was an ordinary stock dividend valued at $12,000 and cash dividends were also paid. 5.Interest expense for the year was $130,000.Income tax expense was $116,000. 6.Fesone arranged for a $200,000 bank loan to finance the purchase of the held-to-maturity investments. 7.Fesone has adopted a policy of reporting cash flows arising from the payment of interest and dividends as operating and financing activities,respectively. 8.The held-for-trading investments are not cash equivalents. Required: a.Prepare a statement of cash flows for the year ended December 31,2018 using the indirect method. b.Discuss how the transaction(s)above that are not reported on the statement of cash flows are reported in the financial statements.

The activities for the year ended December 31,2018 included the following: ∙ 2018's net income after taxes totaled $125,000. ∙ Accounts receivable Increased $32,000 ∙ Recorded a $10,000 goodwill impairment loss during the year ∙ Inventory decreased $8,000 How much would be presented as cash flow from operations?

Identify if the following investments meet the requirements to be classified as cash and cash equivalents.

Which category is used on the cash flow statement?

Provide a summary of presentation and disclosure requirements relating to the statement of cash flows.

Soorya Law Ltd.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section.Soorya Law's activities for the year ended December 31,2016 included the following: ∙ Sold a held-for-trading investment for $11,000.The book value of this investment,which was designated as a cash equivalent,was $11,000. ∙ Sold an available-for-sale investment for $27,000.The book value of the investment was $27,000. ∙ Borrowed $120,000 from the bank for investment purposes. ∙ Sold equipment for $63,000 that originally cost $80,000.The net book value of this item at time of sale was $54,000. ∙ Received $5,000 in interest and $5,000 in dividends on sundry investments. ∙ Paid $4,000 interest on the investment loan. ∙ Acquired land and buildings valued at $450,000 by paying $150,000 cash and issuing ordinary shares for the balance. ∙ Bought $350,000 in bonds at a premium,paying $305,000 cash. Required: a.Prepare the cash flows from investing activities section of the statement of cash flows. b.Identify how the activities listed above that are not investing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

Why are "cash and cash equivalents" treated as a single unit on the cash flow statement?

Angela's Angels Corp.'s policy is to report all cash inflows from interest and dividends in the investing section and cash outflows arising from interest and dividends in the financing section.Angela's activities for the year ended December 31,2016 included the following: ∙ Declared and issued a stock dividend valued at $15,000. ∙ Issued $300,000 in ordinary shares. ∙ Accounts payable decreased $38,000 during the year. ∙ Paid $910,000 to repurchase bonds.The book value of the bonds was $1,000,000. ∙ Made a $25,000 principal payment on a bank loan. ∙ Interest expense for the period was $12,000.The interest payable account increased $2,000. ∙ Declared a $12,000 cash dividend payable on January 15,2017. ∙ Acquired an automobile costing $30,000 under a finance lease. Required: a.Prepare the cash flows from financing activities section of the statement of cash flows. b.Identify how the activities listed above that are not financing activities would be reported in the statement of cash flows assuming that the statement is prepared using the indirect method.

Which of the following is an investing activity?

Which is a correct statement?

Which of the following is an operating activity?

Which statement is correct?