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SERIES A PROBLEMS Series A Problems COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Zowine Company’s condensed income statement for the year ended December 31, 20-2, was as follows: Additional information obtained from Zowine’s comparative balance sheets as of December 31, 20-2 and 20-1, was as follows: REQUIRED Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2. STATE MENT OF CASH FLOWS Refer to Problem 23-9A. The following additional information was obtained from Zowine’s financial statements and auxiliary records for the year ended December 31, 20-2: REQUIRED Prepare a statement of cash flows for Zowine for the year ended December 31, 20-2.

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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

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Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
Chapter 23, Problem 10SPA
Textbook Problem
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SERIES A PROBLEMS

Series A Problems

COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Zowine Company’s condensed income statement for the year ended December 31, 20-2, was as follows:

Chapter 23, Problem 10SPA, SERIES A PROBLEMS Series A Problems COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Zowine Companys , example  1

Additional information obtained from Zowine’s comparative balance sheets as of December 31, 20-2 and 20-1, was as follows:

Chapter 23, Problem 10SPA, SERIES A PROBLEMS Series A Problems COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Zowine Companys , example  2

REQUIRED

Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2.

STATE MENT OF CASH FLOWS Refer to Problem 23-9A. The following additional information was obtained from Zowine’s financial statements and auxiliary records for the year ended December 31, 20-2:

Chapter 23, Problem 10SPA, SERIES A PROBLEMS Series A Problems COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Zowine Companys , example  3

REQUIRED

Prepare a statement of cash flows for Zowine for the year ended December 31, 20-2.

To determine

Prepare a statement of cash flows for Z Company for the year ended December 31, 20-2.

Explanation of Solution

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Indirect method: Under indirect method, net income is reported first, and then non-cash expenses, losses from fixed assets, and changes in opening balances and ending balances of current assets and current liabilities are adjusted to reconcile the net income balance.

Cash flows from operating activities: Operating activities refer to the normal activities of a company to carry out the business.

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

Cash flows from operating activities (Indirect method)
Net income:
 
Add: Decrease in current assets
         Increase in current liability
         Depreciation expense and amortization expense
         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)

Cash flows from investing activities: Investing activities refer to the activities carried out by a company for acquisition of long term assets.  It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

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

Cash flows from investing activities
 
Add: Proceeds from collection of loan made to borrowers
         Sale of marketable securities / investments
         Sale of property, plant and equipment
         Proceeds from discounting notes receivables
 
Deduct: Purchase of fixed assets/long-lived assets
              Loan made by the company to others
              Purchase of marketable securities
Net cash provided from or used by investing activities

Table (2)

Cash flows from financing activities: Financing activities refer to the activities carried out by a company to mobilize funds to carry out the business activities.  It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations...

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Chapter 23 Solutions

College Accounting, Chapters 1-27
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