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Chapter 14: Q14-5RQ (page 768)
Question: Describe the two formats for reporting operating activities on the statement of cash flows.
Answer
The two formats for reporting operating activities on the statement of cash flows are:
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Accountants for Benson, Inc. have assembled the following data for the year ended December 31, 2018:
2018 2017 Current Assets: Cash \( 105,100 \) 18,000 Accounts Receivable 64,400 68,900 Merchandise Inventory 86,000 82,000 Current Liabilities: Accounts Payable 58,000 56,100 Income Tax Payable 14,700 16,900
Transaction Data for 2018:
Issuance of common stock for cash \( 37,000
Payment of notes payable \) 47,100
Depreciation expense 24,000
Payment of cash dividends 53,000
Purchase of equipment with cash 69,000
Issuance of notes payable to borrow cash 68,000
Acquisition of land by issuing long-term notes payable 123,000
Gain on sale of building 4,500
Book value of building sold 61,000
Net income 66,000
Prepare Benson鈥檚 statement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities
Question: Preparing operating activities cash flow鈥攄irect method
The accounting records of Four Seasons Parts reveal the following:
Payment of salaries and wages \( 34,000
Net income \) 21,000
Depreciation expense 10,000
Payment of income tax 16,000
Payment of interest 17,000
Collection of dividend revenue 5,000
Payment of dividends 5,000
Payment to suppliers 51,000
Collections from customers 116,000
Compute cash flows from operating activities using the direct method for the year ended December 31, 2018.
Question: If current assets other than cash increase, what is the effect on cash? What about a decrease in current assets other than cash?
Question: Computing cash flows from operating activities鈥攊ndirect method
DVR Equipment, Inc. reported the following data for 2018:
Income Statement:
Net Income $ 43,000
Depreciation Expense 6,000
Balance Sheet:
Increase in Accounts Receivable 6,000
Decrease in Accounts Payable 2,000
Compute DVR鈥檚 net cash provided by operating activities鈥攊ndirect method.
Preparing a statement of cash flows using the direct method Jelly Bean, Inc. began 2018 with cash of \(58,000. During the year, Jelly Bean earned revenue of \)595,000 and collected \(614,000 from customers. Expenses for the year totaled \)427,000, of which Jelly Bean paid \(212,000 in cash to suppliers and \)205,000 in cash to employees. Jelly Bean also paid \(148,000 to purchase equipment and a cash dividend of \)57,000 to its stockholders during 2018. Prepare the company鈥檚 statement of cash flows for the year ended December 31, 2018. Format operating activities by the direct method.
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