Chapter 14, Problem 14.30E

Requirement 1

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

To Compute: The cash collections from customers.

Requirement 2

To determine

To Compute: The amount of cash payment for merchandise inventory.

Requirement 3

To determine

To Compute: The amount of cash payment of operating expenses.

Requirement 4

To determine

To Compute: The acquisition of property and equipment.

Requirement 5

To determine

To Compute: The amount of borrowings

Requirement 6

To determine

To Compute: The cash receipt from issuance of common stock

Requirement 7

To determine

To Compute: The payment of cash dividends.