Bundle: Accounting, 27th + Cengagenowv2, 2 Terms Printed Access Card
27th Edition
ISBN: 9781337587419
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 16, Problem 16.15EX
a.
To determine
Statement of cash flows: It is one of the financial statement that shows the inflows and outflows of 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.
Indirect method: Under this method, different items are adjusted from the net income to calculate the net cash provided from operating activities and the amount is further adjusted with cash flows from investing and financing activities to finally arrive at the closing balance of cash.
Cash flows from operating activities: These are the cash generated from the normal business operations.
The below table shows the way of calculation of cash flows from operating activities:
| Cash flows from operating activities (Indirect method) |
| Net Income xxxxx |
| Add: Decrease in current assets |
| Increase in current liability |
| |
| Loss on sale of plant assets |
| Deduct: Increase in current assets |
| Decrease in current liabilities |
| Gain on sale of plant assets |
| Net cash provided from or used by operating activities |
Table (1)
The net income reported by C Incorporation for the year ended December 31.
b.
To determine
To Explain: Why net income is different from net cash flow from operating activities.
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Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$7,700
Decrease in inventories
19,140
Depreciation
29,480
Gain on sale of investments
13,200
Increase in accounts payable
5,280
Increase in prepaid expenses
2,970
Increase in accounts receivable
14,300
a. Determine the net income reported by Curwen Inc. for the year ended December 31.
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for the year ended December 31. The following information was reported in the “Cash flows from operating activities” section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$7,700
Decrease in inventories
19,140
Depreciation
29,480
Gain on sale of investments
13,200
Increase in accounts payable
5,280
Increase in prepaid expenses
2,970
Increase in accounts receivable
14,300
a. Determine the net income reported by Curwen Inc. for the year ended December 31.$fill in the blank 1
b. Curwen’s net income is different than net cash flow from operating activities. Which of the following could possibly be the reason for such difference?
Because depreciation expense which has no effect on cash flows from operating activities.
Changes in current operating assets and…
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flows from operating activities of $148,200 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from (used for) operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$3,000
Decrease in inventories
7,400
Depreciation
11,400
Gain on sale of investments
5,100
Increase in accounts payable
2,100
Increase in prepaid expenses
1,300
Increase in accounts receivable
5,600
a. Determine the net income reported by Curwen Inc. for the year ended December 31.$fill in the blank 1
b. Curwen’s net income differed from cash flows from operations because of the following:
Depreciation expense, which has no effect on net cash flows from operating activities.
Gain on the sale of investments is reported in investing activities section of the cash flow…
Chapter 16 Solutions
Bundle: Accounting, 27th + Cengagenowv2, 2 Terms Printed Access Card
Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - Prob. 5DQCh. 16 - A long-term investment in bonds with a cost of...Ch. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQCh. 16 - Name five common major classes of operating cash...
Ch. 16 - Prob. 16.1APECh. 16 - Prob. 16.1BPECh. 16 - Adjustments to net incomeindirect method Ripley...Ch. 16 - Prob. 16.2BPECh. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Prob. 16.4APECh. 16 - Prob. 16.4BPECh. 16 - Land transactions on the statement of cash flows...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Prob. 16.6APECh. 16 - Prob. 16.6BPECh. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Prob. 16.8APECh. 16 - Prob. 16.8BPECh. 16 - Prob. 16.1EXCh. 16 - Effect of transactions on cash flows State the...Ch. 16 - Classifying cash flows Identify the type of cash...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Prob. 16.6EXCh. 16 - Prob. 16.7EXCh. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Prob. 16.10EXCh. 16 - Reporting land transactions on statement of cash...Ch. 16 - Prob. 16.12EXCh. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Prob. 16.15EXCh. 16 - Prob. 16.16EXCh. 16 - Prob. 16.17EXCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.19EXCh. 16 - Prob. 16.20EXCh. 16 - Determining selected amounts for cash flows from...Ch. 16 - Prob. 16.22EXCh. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Prob. 16.24EXCh. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.2APRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.4APRCh. 16 - Prob. 16.5APRCh. 16 - Prob. 16.1BPRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to PR...Ch. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Prob. 16.3CPCh. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...
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