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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Preparing a Statement of Cash Flows

SDPS Inc. provides airport transportation services in southern California. An income statement for 2019 and balance sheets for 2019 and 2018 appear below.

Chapter 11, Problem 56PSB, Preparing a Statement of Cash Flows SDPS Inc. provides airport transportation services in southern

Required:

l. Prepare a statement of cash flows using the indirect method to compute net cash flow from operating activities.

2. CONCEPTUAL CONNECTION Explain what has been responsible for the decrease in cash.

3. CONCEPTUAL CONNECTION Determine how SDPS financed its increase in net property, plant, and equipment during a period in which it had a substantial net loss.

To determine

(a)

A cash flow statement is a budget report that gives total information in regard to all cash inflows an organization gets from its continuous tasks and outside venture sources, just as all cash outflows that compensation for business activities and speculations amid a given period.

To compute:

Prepare statement of cash flow using the indirect method to compute net cash flow from operating activities.

Explanation

In the book of SDPS Inc.

Statement of cash flow operating activity

Particular Detail ($) Amount ($)
Net loss as per income statement (23000)
Depreciation expense 215000
Loss on sale of equipment, plant and property 3000
Interest expense 14000 232000
Operating profit be...
To determine

(b)

The ending balance of a cash-flow statement will constantly level with the cash sum appeared on the organization’s balance sheet. Cash flow is, by definition, the adjustment in an organization’s cash starting with one period then onto the next. Consequently, the cash-flow statement should dependably balance with the cash account from the balance sheet.

To discuss:

Explain what has been responsible for the decrease in cash.

To determine

(c)

I

t doesn’t affect net gain or earnings. A fixed resource is otherwise called property, plant, and hardware. over its valuable life, which keeps a noteworthy expense from being. Accumulated depreciation is the aggregate sum of depreciation cost that has been recorded so far for the benefit.

To discuss:

Determine how SDPS financial its increase in net property, plant, and equipment during a period in which it had a substantial net loss.

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