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 are the cash produced by the normal business operations. 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. The statement of cash flows of Incorporation J for the year ended June 30, 2018 using direct method: Incorporation J Statement of Cash Flows Year Ended June 30, 2018 Particulars $ $ Cash flows from operating activities: Receipts: Collections from customers (1) $237,500 Dividends received 11,500 Total cash receipts 249,000 Payments: Paid to suppliers (2) -108,300 Paid to employees (3) -39,800 Paid for income tax -10,500 Paid for interest -2,500 Total cash payments -161,100 Net cash provided by operating activities 87,900 Cash flows from investing activities: Acquisition of plant assets -122,000 Proceeds from sale of land 24,000 Net cash used for investing activities 2. To determine To Evaluate: The Company’s cash flows for the year.

Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

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

Publisher: PEARSON

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Chapter 11, Problem 11.35BE

To determine

To prepare: The statement of cash flows of Incorporation J for the year ended June 30, 2018 using direct method:

To determine

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

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Chapter 11, Problem 11.34BE

Chapter 11, Problem 11.36BE

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Financial Accounting (12th Edition) (What's New in Accounting)

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 J for the year ended June 30, 2018 using direct method:

Solution Summary: The author explains the statement of cash flows of Incorporation J for the year ended June 30, 2018 using direct method.