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Chapter 14: Q15SE (page 774)

Using a spreadsheet to complete the statement of cash flows鈥� indirect method

Companies can use a spreadsheet to complete the statement of cash flows. Each item that follows is recorded in the transaction analysis columns of the spreadsheet.

  1. Net income
  2. Increases in current assets (other than Cash)
  3. Decreases in current liabilities
  4. Cash payment for acquisition of plant assets
  5. Cash receipt from issuance of common stock
  6. Depreciation expense

Identify each as being recorded by a Debit or Credit in the statement of cash flows section of the spreadsheet

Short Answer

Expert verified
  1. Debit
  2. Credit
  3. Credit
  4. Credit
  5. Debit
  6. Debit

Step by step solution

01

Step-by-Step SolutionStep 1: Statement of cash flow using indirect method and spreadsheet

Organizations can use a spreadsheet to prepare cash flow statements using the indirect method. In the spreadsheet first balance sheet is prepared followed by the cash flow statement.

02

Identification of transaction as debit or credit

Particulars

Debit or Credit

Net Income

Debit

Increase in current assets (other than cash)

Credit

Decreases in current liabilities

Credit

Cash payment for acquisition of plant assets

Credit

Cash receipt from issuance of common stock

Debit

Depreciation Expense

Debit

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Most popular questions from this chapter

Question: Classifying items on the statement of cash flows Cash flow items

must be categorized into one of four categories. Identify each item as operating (O), investing (I), financing (F), or non-cash (N).

a. Cash purchase of merchandise inventory

b. Cash payment of dividends

c. Cash receipt from the collection of long-term notes receivable

d. Cash payment for income taxes

e. Purchase of equipment in exchange for notes payable

f. Cash receipt from the sale of land

g. Cash received from borrowing money

h. Cash receipt for interest income

i. Cash receipt from the issuance of common stock

j. Cash payment of salaries

Question: Kalapono Company expects the following for 2018:

鈥� Net cash provided by operating activities of \(100,000.

鈥� Net cash provided by financing activities of \)10,000.

鈥� Net cash used for investing activities of \(20,000 (no sales of long-term assets).

鈥� Cash dividends paid to stockholders was \)2,000.

How much free cash flow does Kalapono expect for 2018?

Question: Describe the three basic types of cash flow activities.

Question: Describe the five steps used to prepare the statement of cash flows by the indirect method.

Question: Classifying items on the indirect statement of cash flows

Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement:

a. Increase in accounts payable

b. Payment of dividends

c. Decrease in accrued liabilities

d. Issuance of common stock

e. Gain on sale of building

f. Loss on sale of land

g. Depreciation expense

h. Increase in merchandise inventory

i. Decrease in accounts receivable

j. Purchase of equipment

Identify each item as a(n): 鈥� Operating activity鈥攁ddition to net income (O+) or subtraction from net income (O-) 鈥� Investing activity鈥攃ash inflow (I+) or cash outflow (I-) 鈥� Financing activity鈥攃ash inflow (F+) or cash outflow (F-) 鈥� Activity that is not used to prepare the indirect statement of cash flows (N)
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