Chapter 23: Q21Q (page 1372)
Question: Why is it desirable to use a worksheet when preparing a statement of cash flows? Is a worksheet required to prepare a statement of cash flows?
Answer
Yes, the worksheet is desirablefor preparing the statement of cash flow because it provides relevant information in a classified manner.
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Following are selected statement of financial position accounts of Sander Bros. Corp. at December 31, 2017 and 2016, and the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended December 31, 2017, and additional information.
Selected statement of financial position accounts
2017 | 2016 | Increase (Decrease) | |
Assets | |||
Property, plant, and equipment | \(277,000 | \)247,000 | \(30,000 |
Accumulated depreciation | (178,000) | (167,000) | (11,000) |
Accounts receivable | 34,000 | 24,000 | 10,000 |
Equity and liabilities | |||
Share capital—ordinary, \)1 par | \( 22,000 | \) 19,000 | \( 3,000 |
Share premium—ordinary | 9,000 | 3,000 | 6,000 |
Retained earnings | 104,000 | 91,000 | 13,000 |
Bonds payable | 49,000 | 46,000 | 3,000 |
Dividends payable | 8,000 | 5,000 | 3,000 |
| Selected income statement information for the year ended December 31, 2017 | |||
Sales revenue | \)155,000 | ||
Depreciation | 38,000 | ||
Gain on sale of equipment | 14,500 | ||
Net income | 31,000 | ||
Additional information:
There was no amortization of bond discount or premium.
Instructions Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.
Bloom Corporation had the following 2017 income statement.
Sales revenue | \(200,000 |
Cost of goods sold | 120,000 |
Gross profit | 80,000 |
Operating expenses (including depreciation of \)21,000) | 50,000 |
Net income | \(30,000 |
The following accounts increased during 2017: Accounts Receivable \)12,000, Inventory \(11,000, and Accounts Payable \)13,000. Prepare the cash flows from the operating activities section of Bloom’s 2017 statement of cash flows using the direct method.
Question: CA23-5 (Purpose and Elements of SCF) GAAP requires the statement of cash flows be presented when financial statements are prepared.
Instructions
(a) Explain the purposes of the statement of cash flows.
(b) List and describe the three categories of activities that must be reported in the statement of cash flows.
(c) Identify and describe the two methods that are allowed for reporting cash flows from operations.
(d) Describe the financial statement presentation of noncash investing and financing transactions. Include in your description an example of a noncash investing and financing transaction.
What is the purpose of the statement of cash flows? What
information does it provide?
Moxley Corporation had January 1 and December 31 balances as follows.
1/1/17 12/31/17
Inventory \(95,000 \)113,000
Accounts payable 61,000 69,000
For 2017, cost of goods sold was $500,000. Compute Moxley’s 2017 cash payments to suppliers.
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