Q4Q What are the major sources of ca... [FREE SOLUTION]

Chapter 23: Q4Q (page 1371)

What are the major sources of cash (inflows) in a statement of cash flows? What are the major uses (outflows) of cash?

Short Answer

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Major sources of cash in a statement of cash flows are cash from operating activities, issuing of shares, proceeds by borrowing, selling of fixed assets.

The major uses (outflows) of cash includes Payment to suppliers, purchase of fixed assets, payment of a cash dividend, repayment of debts or loans.

Step by step solution

Meaning of Cash flows Statement

The cash flow statement gives information on changes in a company's Cash Equivalents and Cash throughout an accounting period. This adjustment consolidates the interests in running, finance, and investing.

Explanation on major sources of cash (inflows) in a statement of cash flows and major uses (outflows) of cash.

Cash from operating exercises, the issuing of obligations, the issuance of capital stock, a lot of investments, and the sale of real estate, machinery, and equipment are many sources of cash in a statement of cash flows. These are the some of the items which indicates the majority of cash inflows. Although there are more transactions.

Cash can be utilized for various things, such as operational costs, dividend payments in cash, debt repayment, investing, stock redemption, and acquiring real bequest, apparatus, and equipment.These transactions which indicates the majority of cash outflows of the company. Also there are more transactions, apart from these.

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Sales revenue	\(200,000
Cost of goods sold	120,000
Gross profit	80,000
Operating expenses (including depreciation of \)21,000)	50,000
Net income	\(30,000

MICHAELS COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2017 AND 2016
	2017	2016
Cash	\(10,000	\)4,000
Accounts receivable	20,500	12,950
Short-term investments	22,000	30,000
Inventory	42,000	35,000
Prepaid rent	3,000	12,000
Prepaid insurance	2,100	900
Supplies	1,000	750
Land	125,000	175,000
Building	350,000	350,000
Accumulated depreciation 鈥� building	(105,000)	(87,500)
Equipment	525,000	400,000
Accumulated depreciation 鈥� equipment	(130,000)	(112,000)
Patents	45,000	50,000
Total assets	\(910,600	\)871,100

Account payable	\(22,000	\)32,000
Income tax payable	5,000	4,000
Salaries and wages payable	5,000	3,000
Short-term note payable	10,000	10,000
Long-term note payable	60,000	70,000
Bond payable	400,000	400,000
Premium on bond payable	20,303	25,853
Common stock	240,000	220,000
Paid-in-capital in excess of par 鈥� common stock	25,000	17,500
Retained earnings	123,297	88,747
Total liabilities and stockholders equity	\(910,600	\)871,100

MICHAELS COMPANY INCOME STATEMENT AND DIVIDEND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue		\(1,160,000
Cost of goods sold		748,000
Gross margin		412,000
Operating expenses
Selling expenses	\)79,200
Administrative expenses	156,700
Depreciation/Amortization expenses	40,500
Total operating expenses		276,400
Income from operations		135,600
Other revenue/expenses
Gain on sale of land	8,000
Gain on sale of short-term investment	4,000
Dividend revenue	2,400
Interest expenses	(51,750)	(37,350)
Income before tax		98,250
Income tax expenses		39,400
Net income		58,850
Dividend to common stockholders		(24,300)
To Retained earnings		$34,550

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What are the major sources of cash (inflows) in a statement of cash flows? What are the major uses (outflows) of cash?

Short Answer

Step by step solution

Meaning of Cash flows Statement

Explanation on major sources of cash (inflows) in a statement of cash flows and major uses (outflows) of cash.

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