Concept explainers
a
Consolidated statement of cash flow: Consolidated entities, as with individual companies, must present a statement of cash flow when they issue a complete set of financial statements. A consolidated statement of
Cash flows statement is divided in to three parts, cash flows from operating activities, it explains source and uses of cash from ongoing regular business activity. Cash flow from financing activity showing Funds Company generated using finance in the business, and investing activity displays how much money has been used in or generated by making investments during specific time period.
the computation of cash received from customers.
b
Consolidated statement of cash flow: Consolidated entities, as with individual companies, must present a statement of cash flow when they issue a complete set of financial statements. A consolidated statement of cash flows is similar to a statement of cash flows prepared for an individual corporate entity and is prepared in same manner. Consolidated statement of cash flow is prepared after consolidated financial statement. Consolidated cash flow statement is prepared from the information in the three consolidated statements. When an indirect approach is used, consolidated net income must be adjusted for all items that affect consolidated net income and the cash of consolidated entity effectively.
Cash flows statement is divided in to three parts, cash flows from operating activities, it explains source and uses of cash from ongoing regular business activity. Cash flow from financing activity showing Funds Company generated using finance in the business, and investing activity displays how much money has been used in or generated by making investments during specific time period.
the computation of cash paid to suppliers.
c
Consolidated statement of cash flow: Consolidated entities, as with individual companies, must present a statement of cash flow when they issue a complete set of financial statements. A consolidated statement of cash flows is similar to a statement of cash flows prepared for an individual corporate entity and is prepared in same manner. Consolidated statement of cash flow is prepared after consolidated financial statement. Consolidated cash flow statement is prepared from the information in the three consolidated statements. When an indirect approach is used, consolidated net income must be adjusted for all items that affect consolidated net income and the cash of consolidated entity effectively.
Cash flows statement is divided in to three parts, cash flows from operating activities, it explains source and uses of cash from ongoing regular business activity. Cash flow from financing activity showing Funds Company generated using finance in the business, and investing activity displays how much money has been used in or generated by making investments during specific time period.
the computation the resulting operating cash flow.
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Chapter 10 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- Parent plc obtained control of Subsidiary plc on 12 February 20X1, when Subsidiary plc held £28,000 in accounts receivable. At 31 December 20X1, Parent and Subsidiary had accounts receivable of £90,000 and £35,000, respectively. At 1 January 20X1, Parent had £75,000 in accounts receivable. In relation to Parent plc’s consolidated statement of cash flow, what is the impact of the change in accounts receivable for the financial year ending 31 December 20X1? a. An increase in cash flow of £50,000 b. A decrease in cash flow of £50,000 c. An increase in cash flow of £22,000 d. A decrease in cash flow of £22,000 e. An increase in cash flow of £15,000 f. A decrease in cash flow of £15,000arrow_forwardTaft Technologies has the following relationships: Annual sales 1,200,000.00 Current liabilities 375,000.00 Days sales outstanding (DSO) (365-day year) 40 Inventory turnover ratio 4.8 Current ratio 1.2 The company’s current assets consist of cash, inventories, and accounts receivable. How much cash does Taft have on its balance sheet?arrow_forwardRefer to the following financial statements for Crosby Corporation: CROSBY CORPORATIONIncome StatementFor the Year Ended December 31, 20X2 Sales $ 4,180,000 Cost of goods sold 2,740,000 Gross profit $ 1,440,000 Selling and administrative expense 653,000 Depreciation expense 244,000 Operating income $ 543,000 Interest expense 82,700 Earnings before taxes $ 460,300 Taxes 191,000 Earnings after taxes $ 269,300 Preferred stock dividends 10,000 Earnings available to common stockholders $ 259,300 Shares outstanding 150,000 Earnings per share $ 1.73 Statement of Retained EarningsFor the Year Ended December 31, 20X2 Retained earnings, balance, January 1, 20X2 $ 993,200 Add: Earnings available to common stockholders, 20X2 259,300 Deduct: Cash dividends declared and paid in 20X2 202,000 Retained earnings, balance, December 31, 20X2 $ 1,050,500 Comparative Balance SheetsFor 20X1…arrow_forward
- Effect of Transactions on Cash Flows State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows: a. Retired $340,000 of bonds, on which there was $3,400 of unamortized discount, for $354,000. b. Sold 7,000 shares of $25 par common stock for $56 per share. c. Sold equipment with a book value of $65,500 for $94,300. d. Purchased land for $326,000 cash. e. Purchased a building by paying $81,000 cash and issuing a $90,000 mortgage note payable. f. Sold a new issue of $280,000 of bonds at 97. g. Purchased 2,800 shares of $20 par common stock as treasury stock at $39 per share. h. Paid dividends of $2.50 per share. There were 21,000 shares issued and 3,000 shares of treasury stock. Effect Amount Cash payment а. b. Cash receipt Cash receipt C. d. Cash payment $1 Cash payment е. f. Cash receipt Cash payment g. h. Cash paymentarrow_forwardRefer to the following financial statements for Crosby Corporation: CROSBY CORPORATIONIncome StatementFor the Year Ended December 31, 20X2 Sales $ 3,880,000 Cost of goods sold 2,620,000 Gross profit $ 1,260,000 Selling and administrative expense 656,000 Depreciation expense 300,000 Operating income $ 304,000 Interest expense 87,900 Earnings before taxes $ 216,100 Taxes 155,000 Earnings after taxes $ 61,100 Preferred stock dividends 10,000 Earnings available to common stockholders $ 51,100 Shares outstanding 150,000 Earnings per share $ 0.34 Statement of Retained EarningsFor the Year Ended December 31, 20X2 Retained earnings, balance, January 1, 20X2 $ 855,400 Add: Earnings available to common stockholders, 20X2 51,100 Deduct: Cash dividends declared and paid in 20X2 153,000 Retained earnings, balance, December 31, 20X2 $ 753,500 Comparative Balance SheetsFor 20X1 and…arrow_forwardTaft Technologies has the following relationships: annual sales $1,200,000 current liabilities $375,000 days sales outstanding(DSO)(360-day year) 40 Inventory Turnover Ratio 4.8 current ratio 1.2 The company's current assets consist of cash, inventories, and accounts receivable. How much cash does Taft have on its balance sheet, knowing also that the company's Cost of Goods Sold (including Depreciation) is 960,000 ? A. -$ 8,333 B. $ 116,667 C. $125,000 D. $200,000 E. $316,667arrow_forward
- Taft Technologies has the following relationships: annual sales $1,200,000 current liabilities $375,000 days sales outstanding (DSO)(360-day year) 40 Inventory Turnover Ratio 4.8 current ratio 12 The company's current assets consist of cash, inventories, and accounts receivable. How much cash does Taft have on its balance sheet, knowing also that the company's Cost of Goods Sold (including Depreciation) is 460,000 ? A -$8,333 B. $116,667 C $125,000 D. $200,000 E $316,667arrow_forwardThe following information relates to Boston corporation: Account current year prior year Net sales (all credit) $445,400 $362,000 Cost of good sold $220,000 $185,000 Gross profit $225,400 $177,000 Income from operations $72,000 $80,000 Interest expense $8,000 $14,000 Net income $40,000 $35,000 Cash $34,000 $28,000 Account receivable, net $42,000 $62,000 Inventory $120,000 $100,000 Prepaid expenses $4,000 $2,000 Total current assets $200,000 $192,000 Total long term assets $200,000 $230,000 Total current liabilities $100,000 $165,000 Total long term liabilities $44,000 $95,000 Common stock, No par, 8,000 shares, value $120/share $80,000 $80,000 1. Compute the acid test ratio for the current year. 2. Compute the inventory turnover for the current year. 3. Compute days sales in receivables for the current year 4. Compute the current ratio for the current year. 5. Based on the above answer, evaluate the financial performance of Boston Corp.arrow_forwardInnovative Products reported net income of $223,000. Beginning and ending inventory balances were $44,000 and $46,500, respectively. Accounts Payable balances at the beginning and end of the year were $39,500 and $35,500, respectively. Assuming that all relevant information has been presented, the company would report net operating cash flows of: Multiple Choice $221,500. $216,500. $229,500. $224,500.arrow_forward
- The most recent financial statements for Alexander Co. are shown here: Income Statement Balance Sheet Sales $50,000 Current assets $78,300 Long-term debt $54,000 Costs 32,000 Fixed assets 43,200 Equity 67,500 Taxable income $18,000 Total $121,500 Total $121,500 Taxes (23%) 4,140 Net income $13,860 Assets and costs are proportional to sales. The company maintains a constant 36 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum increase in sales that can be sustained assuming no new equity is issued?arrow_forward3-12 Financial statements The Davidson Corporation's balance sheet and income statement are given here: Davidson Corporation: Balance Sheet as of December 31, 2005 (Millions of Dollars) Assets Liabilities and Equity $ 15 Cash and equivalents Accounts receivable Accounts payable Notes payable Accruals $ 120 515 220 Inventories 880 280 $ 620 1,520 $2,140 Total current assets $1,410 Total current liabilities Net plant and equipment 2,590 Long-term bonds Total debt Common stock (100 million shares) 260 Retained earnings Common equity Total liabilities and equity 1,600 $1,860 $4,000 Total assets $4,000arrow_forwardAccounts Receivable TurnoverThe following financial data is from Brenner Instruments' financial statements (thousands of dollars, except earnings per share.) (thousands of dollars, except earnings per share) Sales revenue $210,000 Cost of goods sold 125,000 Net income 8,300 Dividends 2,600 Earnings per share 4.15 BRENNER INSTRUMENTS, INC.Balance Sheet (Thousands of Dollars) Current Year Previous Year Assets Cash $18,300 $18,000 Accounts receivable (net) 46,000 41,000 Inventory 39,500 43,700 Total current assets 103,800 102,700 Plant assets (net) 52,600 50,500 Other assets 15,600 13,800 Total assets $172,000 $167,000 Liabilities and Stockholders' Equity Notes payable-banks $6,000 $6,000 Accounts payable 22,500 18,700 Accrued liabilities 16,500 21,000 Total current liabilities 45,000 45,700 9% Bonds payable 40,000 40,000 Total liabilities 85,000 85,700 Common stock, $25 par value (2,000,000 shares) 50,000…arrow_forward
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