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. Indirect method: Indirect method uses the accrual basis of accounting, where the Net Income is adjusted to determine the net cash provided from operating activities. Prepare the statement of cash flows of Company XS for the year ended December 31, using indirect method. Company XS Statement of Cash Flows (Indirect Method) For the year ended December 31 Particulars Amount ($) Amount ($) Cash flows from operating activities: Net income [ Refer to Table (3) ] 12,200 Add: Depreciation expenses 12,000 24,200 Changes in current assets and current liabilities [ Refer to Table (2) ] Add: Gain on sale of equipment (1,000) Less: Increase in accounts receivables (7,000) Less: Increase in merchandise inventory (3,000) Less: Increase in accounts payable 9,000 Less: Decrease in wages payable (200) Net cash flows from operating activities 22,000 Cash flows from Investing activities: [ Refer to Table (2) ] Less: Cash payments to purchase equipment (31,000) Add: Cash receipts from sale of equipment 4,000 Net cash used in investing activities (27,000) Cash flows from Financing activities: [ Refer to Table (2) ] Less: Cash payments on long-term note (6,000) Add: Cash receipts from issuing stock (16,000) Net cash flows from financing activities 10,000 Net increase in cash 5,000 Cash balance at the beginning (January 1) 29,000 Cash balance at the end (December 31) 34,000 Table (1) Working Note: Determine the changes in current assets and Liabilities... 2. To determine Evaluate the statement of cash flows.

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ISBN: 9781260218831

Author: Libby

Publisher: MCG CUSTOM

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Chapter 12, Problem 12.5P

To determine

Prepare the statement of cash flows of Company XS for the current year ended December 31 using the indirect method.

To determine

Evaluate the statement of cash flows.

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Chapter 12, Problem 12.4P

Chapter 12, Problem 12.6P

Chapter 12 Solutions

GB 112/212 MANAGERIAL ACC. W/ACCESS >C<

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - What are the major categories of business...Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Prob. 7Q Ch. 12 - Prob. 8Q Ch. 12 - Compare the two methods of reporting cash flows...Ch. 12 - Prob. 10Q

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