FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
7th Edition
ISBN: 9781264017478
Author: Wild
Publisher: MCG
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Chapter 12, Problem 12SP
To determine
Cash Flow Statement:
Cash flow statement is that statement in which, transaction related to cash are recorded. It is mandatory report and included in the financial statement of the company. It is divided into three parts operating activities, investing activity, and financial activity
Operating Activity:
Operating activity is the first part of the cash flow statement. The main focuses of the operating activity on the
Financial Activity:
Financial activity is the part of the cash flow statement. Financial activity involves the long term liability, borrowing and
Investing Activity:
Investing activity is the third part of the cash flow statement which gives the information related to the acquisition and disposal of the long term assets of the company such as land and building, investment and plant.
To prepare: Cash flow statement
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Company ABC is preparing its 2021 financial statements. At the end of 2021, the company purchased a building for $500,000 making a down payment of $200,000 cash and signing a $300,000 mortgage note. The president of Company ABC, Jackie Brown understand that debt transactions are considered a financing activity from a business perspective and also, that purchases of long-term assets are investing activities. Consequently, Jackie is pondering how to report this transaction on the statement of cash flows and has asked you as her accountant to look into the issue.
Using the related GAAP, prepare a memo to the president that summarizes how to report this transaction on the State of Cash Flows
Company ABC is preparing its 2021 financial statements. At the end of 2021, the company purchased a building for $500,000 making a down payment of $200,000 cash and signing a $300,000 mortgage note. The president of Company ABC, Jackie Brown understand that debt transactions are considered a financing activity from a business perspective and also, that purchases of long-term assets are investing activities.
Summarize how this transaction is to be reported on the State of Cash Flows using the related GAAP.
Required:
- What are the issues of the given case? List them.
- Show how the transaction is to be recorded on the statement of cash flows (Journal entries).
- Give an example of the disclousure required for the particular items .
- Give your reasoning/support based on guidance from the codification.
Prepare a statement of owner’s equity for the year ended April 30, 2019. Jerome Foley, the owner, invested an additional $60,000 in the business during the year and withdrew cash of $40,000 for personal use. Jerome Foley, capital as of May 1, 2018, was $1,020,000. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred or there is a decrease in owner’s equity, enter that amount as a negative number using a minus sign.
Chapter 12 Solutions
FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
Ch. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQ
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