1. Explanation Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities. Deduct increase in current assets. Deduct decrease in current liabilities. Add decrease in current assets. Add the increase in current liability. Add depreciation expense and amortization expense. Add loss on sale of plant assets. Less gain on sale of plant assets. Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company. Deduct the amount of cash used to purchase any fixed assets. Add the amount of cash received from sale of any fixed asset. Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends. Add the amount of cash received from any sources of finance. Deduct the amount of cash used for payment for dividend and interest from financing activities. Deduct the amount of cash used for payment of treasury stock from financing activities. Cash flows from operating activities: These are the cash produced by the normal business operations. The statement of cash flows of Incorporation C for the year ended December 31, 2018 using indirect method is prepared as follows: Incorporation C Statement of Cash Flows Year Ended December 31, 2018 Cash flows from operating activities: Net income $48,400 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $26,000 Decrease in accounts receivable (1) 18,000 Decrease in inventory (2) 22,000 Increase in prepaid expenses (3) -1,100 Increase in accounts payable (4) 20,000 Decrease in accrued liabilities (5) -58,000 26,900 Net cash provided by operating activities 75,300 Cash flows from investing activities: Acquisition of plant assets -102000 Proceeds from sale of land 45,000 Net cash used for investing activities -57,000 Cash flows from financing activities: Proceeds from issuance of common stock $80,000 Payment of long-term note payable -18,000 Payment of dividends -14,000 Net cash provided by financing activities 48,000 Net increase in cash $66,300 Cash balance, December 31, 2017 8,700 Cash balance, December 31, 2018 $75,000 Noncash investing and financing activities: Acquisition of plant assets by issuing note payable $51,000 Table (1) Working Notes : Compute the decrease in accounts receivable : Decrease in < 2. To determine To Evaluation: The Company’s cash flows for the year.

Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

12th Edition

ISBN: 9780134833132

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Chapter 11, Problem 11.30BE

To determine

To prepare: The statement of cash flows of Incorporation C for the year ended December 31, 2018 using indirect method.

To determine

To Evaluation: The Company’s cash flows for the year.

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Chapter 11, Problem 11.29BE

Chapter 11, Problem 11.31BE

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Chapter 11 Solutions

Financial Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

Ch. 11 - Quick Check (Answers are given here) The statement...Ch. 11 - Prob. 2QC Ch. 11 - Prob. 3QC Ch. 11 - Which of the three types of activities reported on...Ch. 11 - Prob. 5QC Ch. 11 - On the statement of cash flows, which of the...Ch. 11 - On the statement of cash flows, which of the...Ch. 11 - Prob. 8QC Ch. 11 - Prob. 9QC Ch. 11 - Which of the following transactions does not...

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The statement of cash flows of Incorporation C for the year ended December 31, 2018 using indirect method.

Solution Summary: The author explains how to prepare the statement of cash flows of Incorporation C for the year ended December 31, 2018 using indirect method.

To prepare: The statement of cash flows of Incorporation C for the year ended December 31, 2018 using indirect method.

To Evaluation: The Company’s cash flows for the year.

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Chapter 11 Solutions