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Chapter 23: Q8BE (page 1373)

In 2017, Elbert Corporation had net cash provided by operating activities of \(531,000, net cash used by investing activities of \)963,000, and net cash provided by financing activities of \(585,000. At January 1, 2017, the cash balance was \)333,000. Compute December 31, 2017, cash

Short Answer

Expert verified

The cash balance on December 31, 2017, is computed as $486,000.

Step by step solution

01

Computation of Increase in accounts payable and increase in inventory

Operating activities are defined as the daily activities of the company which involve the production and selling of goods.

02

Computation of cash balance as on December 31,2017

Particulars

Amount ($)

Net cash provided by operating activities

$531,000

Net cash used for investing activities

-963,000

Net cash provided by financing activities

585,000

Net Increase in cash

$153,000

Cash, January 1, 2017

333,000

Cash, December 31, 2017

$486,000

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Most popular questions from this chapter

Where can authoritative IFRS related to the statement of cash flows be found?

Question: The Procter & Gamble Company (P&G)

The financial statements of P&G are presented in Appendix B. The company鈥檚 complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to P&G鈥檚 financial statements and the accompanying notes to answer the following questions.

(a) Which method of computing net cash provided by operating activities does P&G use? What were the amounts of net cash provided by operating activities for the years 2012, 2013, and 2014? Which two items were most responsible for the decrease in net cash provided by operating activities in 2014?

(b) What was the most significant item in the cash flows used for investing activities section in 2014?

What was the most significant item in the cash flows used for financing activities section in 2014?

(c) Where is 鈥渄eferred income taxes鈥� reported in P&G鈥檚 statement of cash flows? Why does it appear in that section of the statement of cash flows?

(d) Where is depreciation reported in P&G鈥檚 statement of cash flows? Why is depreciation added to net income in the statement of cash flows?

Bloom Corporation had the following 2017 income statement.

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

The following accounts increased during 2017: Accounts Receivable \)12,000, Inventory \(11,000, and Accounts Payable \)13,000. Prepare the cash flows from the operating activities section of Bloom鈥檚 2017 statement of cash flows using the direct method.

Question; In the case of a bank overdraft:

  1. GAAP typically includes the amount in cash and cash equivalents.
  2. IFRS typically includes the amount in cash equivalents but not in cash.
  3. GAAP typically treats the overdraft as a liability, and reports the amount in the financing section of the statement of cash flows.
  4. IFRS typically treats the overdraft as a liability, and reports the amount in the investing section of the statement of cash flows.

For purposes of the statement of cash flows, under IFRS interest paid is treated as:

  1. an operating activity in all cases.
  2. an investing or operating activity, depending on use of the borrowed funds.
  3. either a financing or investing activity.
  4. either an operating or financing activity, but treated consistently from period to period.
See all solutions

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