BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

SERIES A EXERCISE

CLASSIFYING BUSINESS TRANSACTIONS Dolores Lopez opened a new consulting business. The following transactions occurred during January of the current year. Classify each transaction as an operating, an investing, or a financing activity.

(a) Invested cash in the business, $10,000.

(b) Paid office rent, $500.

(c) Purchased office equipment. Paid $1,500 cash and agreed to pay the balance of $2,000 in four monthly installments.

(d) Received cash for services rendered, $900.

(e) Paid phone bill, $65.

(f) Made payment on loan in transaction (c), $500.

(g) Paid wages to part-time employee, $500.

(h) Received cash for services rendered, $800.

(i) Paid electricity bill, $85.

(j) Withdrew cash for personal use, $100.

(k) Paid wages to part-time employee, $500.

SERIES A PROBLEM

PREPARING A STATEMENT OF CASH FLOWS Prepare a statement of cash flows based on the transactions reported in Exercise 6Apx-1A.

To determine

Prepare a statement of cash flows for D Consulting for the month ended January 31.

Explanation

Prepare a statement of cash flows for D Consulting for the month ended January 31.

Table (1)

Classification of activities in cash flow statement:

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.

Direct method: Under direct method, cash receipts from customers (cash inflows) and cash payments to suppliers (cash outflows) are reported under the operating activities.

Operating activities: Operating activities include cash inflows and outflows from business operations.

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

Cash flows from operating activities (Direct method)
 
Add: Cash receipts.
         Cash receipt from customer
         Dividend received
         Interest received
 
Less: Cash payments:
To supplier for acquisition of inventory
To employees
For interest on loans
Income tax expenses and other operating expenses
Net cash provided from or used by operating activities

Table (2)

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...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is a partial dependency?

Accounting Information Systems

What factors must be considered when pricing products?

Foundations of Business (MindTap Course List)

(Oligopoly Power) What are three sources of oligopolies?

ECON: MICRO4 (New, Engaging Titles from 4LTR Press)

RATIO ANALYSIS The Corrigan Corporation's 2013 and 2014 financial statements follow, along with some industry a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Explain the concept of vesting.

PAYROLL ACCT.,2019 ED.(LL)-TEXT