FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 12, Problem 12.2BDIE
To determine
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
- 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.
To Prepare: Statement of cash flows of A Company using indirect method.
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Students have asked these similar questions
On its January 1, 2016, balance sheet, Calvin Company reported equipment of $60,000 and accumulated depreciation of $20,000. During 2016, Calvin sold equipment with an original cost of $5,000. Selected information from Calvin's 2016 statement of cash flows follows:
Net income
$20,000
Depreciation expense on equipment
2,000
Gain on sale of equipment
600
Proceeds from sale of equipment
1,500
Purchase of equipment
18,000
Required:Compute the amount of equipment and accumulated depreciation that should appear on Calvin's December 31, 2016, balance sheet.
The following data has been taken from the Shine Machinery Inc., income statement and balance sheet:
Dec. 31, Jan. 2012 Jan. 1, 2013
Income statement:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . .$375,000
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 115,000
Amortization of Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,000
Gain on Sale of Plant Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ….. 91,000
Loss on Sale of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …. . 34,000
Balance sheet:
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...$345,000…
The following information was obtained from Georgia Company’s comparative balance sheets. Assume that Georgia Company’s 2017 income statement showed depreciation expense of $4,000, a gain on sale of investments of $10,000, and a net income of $50,000.
Dec. 31, 2017
Dec. 31, 2016
Cash
$ 20,000
$ 10,000
Accounts receivable
40,000
37,000
Inventory
50,000
45,000
Prepaid rent
5,000
7,000
Long-term investments
20,000
34,000
Plant assets
150,000
100,000
Accumulated depreciation
50,000
46,000
Accounts payable
25,000
20,000
Income tax payable
5,000
6,000
Common stock
121,000
100,000
Retained earnings
84,000
61,000
Calculate the net cash flow from operating activities using the indirect method.
Select one:
A. $42,000
B. $52,000
C. $43,000
D. $34,000
Chapter 12 Solutions
FINANCIAL ACCOUNTING>IC<
Ch. 12 - Prob. 1QCh. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - Prob. 4QCh. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8QCh. 12 - Prob. 9QCh. 12 - Prob. 10Q
Ch. 12 - Prob. 11QCh. 12 - Prob. 12QCh. 12 - Prob. 13QCh. 12 - Prob. 14QCh. 12 - Prob. 15QCh. 12 - Prob. 16QCh. 12 - Prob. 17QCh. 12 - Prob. 18QCh. 12 - Prob. 19QCh. 12 - Prob. 20QCh. 12 - Prob. 21QCh. 12 - Prob. 22QCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Prob. 12.5BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - The management of Uhuru Inc. is trying to decide...Ch. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.1DIECh. 12 - Prob. 12.2ADIECh. 12 - Prob. 12.2BDIECh. 12 - Prob. 12.3DIECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Prob. 12.15ECh. 12 - Prob. 12.1APCh. 12 - Prob. 12.2APCh. 12 - Prob. 12.3APCh. 12 - Prob. 12.4APCh. 12 - Prob. 12.5APCh. 12 - Prob. 12.6APCh. 12 - Prob. 12.7APCh. 12 - Prob. 12.8APCh. 12 - Prob. 12.9APCh. 12 - Prob. 12.10APCh. 12 - Prob. 12.11APCh. 12 - Prob. 12.12APCh. 12 - Prob. 12.1EYCTCh. 12 - Prob. 12.2EYCTCh. 12 - Prob. 12.3EYCTCh. 12 - Prob. 12.7EYCTCh. 12 - Prob. 12.8EYCTCh. 12 - Prob. 12.9EYCTCh. 12 - Prob. 12.1IFRSCh. 12 - Prob. 12.2IFRSCh. 12 - Prob. 12.3IFRS
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