Exam 9: Statement of Cash Flows

The Company'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 $650,000. • Accounts payable decreased $10,000 in 2018. • Selling and administration expenses for the year totaled $200,000. • Accounts receivable increased $20,000 in 2018. • The Company's cost of goods sold in 2018 was $325,000. • The Company's inventory decreased $15,000 during the year. What is the cash receipts from customers under the direct method?

Which statement is correct?

What are financing activities?

How is other comprehensive income (OCI)shown on the Statement of Cash Flows (SCF)?

Select transactions of June Bowen Inc.(JBI)are listed below.JBI uses the indirect method to determine cash flows from operating activities. 1.JBI amortizes $12,000 of the discount on bonds payable. 2.At year-end JBI increases its allowance for bad debts by $18,000. 3.JBI's income tax expense totaled $50,000.Its income tax payable account increased $5,000,while its deferred income tax liability account decreased $8,000. 4.JBI makes payments of $25,000 on an operating lease. 5.JBI declares and distributes a stock dividend valued at $33,000. 6.JBI declares a cash dividend of $30,000.The dividends payable account increases $10,000. 7.JBI sells a held-to-maturity investment for $28,000.The investment's amortized cost is $20,000. Required: Discuss how the activities listed above would be reported in the statement of cash flows.For items with multiple reporting options,identify all available options.For items not reported on the statement of cash flows,indicate the disclosure requirements,if any.

Investing involves buying and selling debt and equity securities.What two categories of investing do not appear in the investing section of the cash flow statement?

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.Assume that Fesone designates the held-for-trading investment as a cash equivalent. 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.

Which statement about "cash and cash equivalents" is correct?

What is cash management?

Jamie Bleay 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.Jamie Bleay 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 $14,000.The book value of the investment was $14,000. • Borrowed $120,000 from the bank for investment purposes. • Sold equipment for $26,000 that originally cost $20,000.The net book value of this item at time of sale was $14,000. • Received $9,000 in interest and $7,000 in dividends on sundry investments. • Paid $4,000 interest on the investment loan. • Acquired land and buildings valued at $700,000 by paying $200,000 cash and issuing ordinary shares for the balance. • Bought $550,000 in bonds at a premium,paying $560,000 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.

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.

What is included in "cash and cash equivalents"?

Which statement about "cash and cash equivalents" is correct?

Green Leaf's activities for the year ended December 31,2018 included the following: • Comprehensive income totaled $538,000 including $88,000 in other comprehensive income. • Paid a cash dividend of $80,000 that was declared in 2017. • Interest expense for the year was $29,000; the opening and closing balances in the interest payable account were $26,000 and $17,000,respectively. • Accounts receivable increased $33,000 and accounts payable decreased $24,000 during the year. • The company paid $56,000 cash for equipment. • The company sold held-to-maturity investments for $26,000.The book value of the investment was $27,000. • Depreciation expense for the year totaled $19,000. • Suffered an impairment loss on patents of $10,000. • Declared and issued a 2-for-l stock split.There were 400,000 ordinary shares outstanding before the split with a collective market value of $100,000,000. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method assuming that the company's policy is to report interest and dividends received as an investing activity and interest and dividends paid as a financing activity.

Which statement is correct?

Select transactions of Irene Accounting Inc.(IAI)are listed below.IAI uses the indirect method to determine cash flows from operating activities. 1.IAI sells a held-to-maturity investment for $28,000.The investment's amortized cost is $20,000. 2.IAI's income tax expense totaled $30,000.Its income tax payable account increased $5,000,while its deferred income tax liability account decreased $18,000. 3.IAI declares a cash dividend of $3,000.The dividends payable account increases $1,000. 4.At year-end IAI increases its allowance for bad debts by $15,000. Required: Discuss how the activities listed above would be reported in the statement of cash flows.For items with multiple reporting options,identify all available options.For items not reported on the statement of cash flows,indicate the disclosure requirements,if any.

Select transactions of SimBis Accounting Inc.(SAI)are listed below.SAI uses the indirect method to determine cash flows from operating activities. 1.SAI purchases a $200,000,45-day Treasury bill held-for-trading investment. 2.SAI amortizes $32,000 of the discount on bonds payable. 3.At year-end SAI increases its allowance for bad debts by $10,000. 4.SAI's income tax expense totaled $40,000.Its income tax payable account increased $5,000,while its deferred income tax liability account decreased $8,000. 5.SAI acquires equipment valued at $80,000 under a finance lease. 6.SAI makes payments of $15,000 on an operating lease. 7.SAI declares and distributes a stock dividend valued at $33,000. 8.SAI declares a cash dividend of $30,000.The dividends payable account increases $15,000. 9.SAI's comprehensive income for the year totaled $200,000 consisting of $150,000 net income and $50,000 other comprehensive income. 10.SAI sells a held-to-maturity investment for $22,000.The investment's amortized cost is $20,000. Required: Discuss how the activities listed above would be reported in the statement of cash flows.For items with multiple reporting options,identify all available options.For items not reported on the statement of cash flows,indicate the disclosure requirements,if any.

Which statement is correct?

Define cash and cash equivalents.

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?