   Chapter 14, Problem 46P ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

#### Solutions

Chapter
Section ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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# The following financial statements were provided by Roberts Company:  At the end of 20X2, Roberts purchased some additional equipment for $20,000.Required:Prepare a statement of cash flows using the indirect method. To determine Chart the statement of cash flows using the indirect method. Explanation Cash Flow Statement: Cash flow statement is a financial statement prepared to provide information about the sources and uses of cash in a firm. In this statement, the activities increasing cash are referred as cash inflows and the activities that decrease cash are referred as cash outflows. Financing and investing activities are two category of a cash flow statement. The statement of cash flows for R Company for 20X2 using indirect method is shown below:  R Company Statement of Cash Flows For the year ended September 30, 20X2 Particulars Amount ($) Cash flows from operating activities: Amount ($) Net loss (800) Add/ Less: Increase in accounts receivable1 (2,000) Decrease in inventories2 2,800 Decrease in accounts payable3 (1,600) Decrease in wages payable4 (400) Depreciation expense5 6,000 Net cash from operating activities 4,000 Cash flows from investing activities: Purchase of equipment (20,000) Net cash from investing activities (20,000) Net decrease in cash (16,000) Table (1) Therefore, there is a net decrease in cash of$16,000.

Working Note:

1.

Calculation of difference in accounts receivable:

(DifferenceinAccountsReceivable)=(AmountofAccountsReceivableof20X2AmountofAccountsReceivableof20X1)=($9,600$7,600)=$2,000 2. Calculation of difference in amount of inventories: (DifferenceinInventories)=(AmountofInventoriesof20X2AmountofInventoriesof20X1)=($18,000$20,800)=$2,800

3

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