Statement of
Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.
Cash flows from operating activities:
These refer to the cash received or cash paid in day-to-day operating activities of a company.
Direct method: This method uses the basis of cash for preparing the cash flows of statement.
Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.
- Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.
- Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.
Cash flow from investing activities:
This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.
Cash flow from financing activities:
This section of cash flows statement provides information about the
To prepare: The cash flow statement of Incorporation V for the year ended December 31, 2018.
Answer to Problem 11.7BP
The cash flow statement of Incorporation V for the year ended December 31, 2018 is as follows:
Incorporation V | ||
Statement of cash flow- Direct method | ||
For the year ended December 31, 2018 | ||
$ | $ | |
Cash flows from operating activities: | ||
Cash collection: | ||
Cash collection from customer (2) (A) | 2,616,000 | |
Cash Payments: | ||
Cash paid to supplier (4) | 1,728,000 | |
Cash paid for income tax (5) | 84,000 | |
Cash paid for interest (6) | 32,900 | |
Operating expenses (3) | 612,400 | |
Total Cash Payments (B) | 2,457,300 | |
Net cash provided by operating activities
| 1,58,700 | |
Cash flows from investing activities: | ||
Sale of land | 62,000 | |
Purchase of Investments | (95,000) | |
Net cash used for investing activities | (33,000) | |
Cash used in financing activities: | ||
Issuance of common stock | 120,000 | |
Payment of dividends | (60,000) | |
Net cash provided by financing activities | (60,000) | |
Net increase (decrease) in cash | 65,700 | |
Beginning Cash balance | 343,800 | |
Ending Cash balance | 409,500 | |
Schedule of non-cash transaction: | ||
Purchase of Equipment by issuing notes payable | $30,000 |
Table (1)
Explanation of Solution
The net cash provided by operating activities is calculated by deducting all cash payments incurred in the operating of the business from all cash receipts from the operating activities of the business. Here, cash receipt includes cash receipts from customers. Cash payments include all cash payments made to suppliers and operating activities.
Cash flow from investing activities is calculated by accounting for inflows and outflows of changes in investments and long terms assets.
Cash flow from financing activities is calculated by accounting for inflows and outflows of changes in long term liabilities and
Working note:
1. Calculate the increase or decreases of current assets and current liabilities:
Schedule in the changes of assets and liabilities | |||
Details | Amount | ||
2018 | 2017 | Increase/ (decrease) | |
| 64,000 | 80,000 | -16,000 |
Inventory | 160,000 | 145,000 | 15,000 |
Prepaid rent | 4,600 | 7,200 | -2,600 |
Accounts payable | 35,000 | 98,000 | -63,000 |
Interest payable | 5,100 | 4,000 | 1,100 |
Income tax payable | 25,000 | 29,000 | -4,000 |
Table (2) (1)
2. Calculate the amount of cash receipt from customer:
3. Calculate the amount of cash paid for operating expense:
4. Calculate the amount of cash paid to the suppliers:
5. Calculate the amount income tax expense:
6. Calculate the amount cash payment for interest expense:
Therefore, the net increases in cash of Incorporation V for the year ended December 31, 2018 is $65,700.
Want to see more full solutions like this?
Chapter 11 Solutions
Financial Accounting
- Preparing Net Cash Flows from Operating Activities-Direct Method Colassard Industries has the following data available for preparation of its statement of cash flows: Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.arrow_forwardCompute the partial statement of cash flows for the year ended December 31, 2018, s computation of net cash flows from operating activities by the indirect method. Bela template to help you structure your answer but you can simply list out the specific ty sources and uses of cash (including the amounts) from operating activities and add u amounts, if you prefer (use reverse side of paper if more space needed):arrow_forwardPARNELL COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues and gains: Sales $890 11 $901 Gain on sale of building Expenses and loss: Cost of goods sold Salaries $ 345 129 53 Insurance 132 Depreciation Interest expense Loss on sale of equipment 59 13 731 170 Income before tax 85 Income tax expense $ 85 Net income PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) Year Change $ 61 2021 2020 Cash 152 91 Accounts receivable Inventory 342 207 135 312 57 228 120 78 181 (131) (49) 120 36 17 (37) 443 Prepaid insurance Accounts payable Salaries payable Deferred tax liability Bond discount 106 108 84 61 218arrow_forward
- Computing cash flows from operating activities—indirect method DVR Equipment, Inc. reported the Following data for 2018: Compute DVR’s net cash provided by operating activities—indirect method.arrow_forwardMatch the individual transactions listed below with their statement of cash flows classification, using the following code: Cash inflow from operating activitiesCash outflow from operating activitiesCash inflow from investing activitiesCash outflow from investing activitiesCash inflow from financing activitiesCash outflow from financing activitiesNone of the above Payments for merchandisePayments for interestPayments for dividendsPayments for plant and equipmentPayments for bond payable retirementsPayments for marketable securitiesPayments for employeesPayments to governmentsIssuing a stock dividendCash from customersCash from issuing common shareCash from dividendsCash from sale of old buildingCash from interestarrow_forwardComputing cash flow items—direct method A-One Mobile Homes reported the following in its financial statements for the year ended December 31,2018: Requirements Compute the collections from customers. Compute payments for merchandise inventory. Compute payments of other operating expenses. Compute the acquisitions of property, plant, and equipment (no sales of property during 2018). Compute the amount of borrowing, with A-One paying no long-term liabilities. Compute the cash receipt from issuance of common stock. Compute the payment of cash dividends.arrow_forward
- y Bookmarks Profiles Tab Window Help S (201 (2|1 (2 | pon.com/ext/map/index.html?_con=con&external_browser=0&launch ouTube aw 11 Q Required information [The following information applies to the questions displayed below.] :9 F1 Classes N Netflix Expenses LANDMAR prior years follow. Lansing Company's current-year income statement and selected balance sheet data at December 31 of the current and For Current Year Ended December 31 Sales revenue 2 Cost of goods sold Depreciation expense Salaries expense Rent expense Insurance expense Interest expense Utilities expense Net income 2 LANSING COMPANY Income Statement @ At December 31 Accounts receivable Inventory Accounts payable Salaries payable F2 W Utilities payable Prepaid insurance Prepaid rent LANSING COMPANY Selected Balance Sheet Accounts # 3 20 F3 E Dashboard EDU 1011 (2019-F... EDU 1011 (2019-F... G Annotated Bibliog... A Study on the He... $ 4 $ 109,200 000 000 F4 Current Year $ 6,000 2,380 4,800 R 46,000 14,000 22,000 9,400 4,200…arrow_forwardPreparing the statement of cash flows—direct method Use the Rolling Hills, Inc. data from Problem P14-34A. Requirements Prepare the 2018 statement of cash flows by the direct method. How will what you learned in this problem help you evaluate an investment?arrow_forwardQUESTION REQUIRED Use the information provided below to prepare the Cash Flow Statement of Jonah Ltd for the year ended 31 December 2022. (Some of the figures have already been entered in the answer book.) INFORMATION The Statement of Comprehensive Income of Jonah Ltd for the year ended 31 December 2022 and Statement of Financial Position as at 31 December 2021 and 2022 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Sales Cost of sales Gross profit Other operating income Gross income Distribution expenses Administrative expenses Earnings before interest and tax Interest income Interest expense Esmings before tax Company tax Earnings after interest and tax STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Non-current assets Land and buildings Plant and machinery Current assets Inventories Accounts receivable Total assets EQUITY AND LIABILITIES Equity Ordinary share capital Retained earnings Non-current liabilities Long-term borrowings…arrow_forward
- Refer to the financial statements of The Home Depot in Appendix A at the end of this book, ordownload the annual report from the Cases section in the Connect library.Required:1. Which of the two basic reporting approaches for the cash flows from operating activities didThe Home Depot use?a. Direct b. Indirect2. What amount of income tax payments did The Home Depot make during the year endedFebruary 2, 2014?a. $639 million c. $3,082 millionb. $2,839 million d. $12 million3. In the fiscal year ended February 2, 2014, The Home Depot generated $7,628 millionfrom operating activities. Indicate where this cash was spent by listing the two largest cashoutflows.a. Amortization ($1,757 million) and Capital Expenditures ($1,389 million)b. Share Repurchase ($8,546 million) and Capital Expenditures ($1,389 million)c. Amortization ($1,757 million) and Share Repurchase ($8,546 million)d. Dividends ($2,243 million) and Share Repurchase ($8,546 million)arrow_forwardCalculator Cash paid to purchase long-term investments would be reported in the statement of cash flows in a. the cash flows from operating activities section. b. the cash flows from financing activities section. C. the cash flows from investing activities section. d. a separate schedule. 4:09 PM 12/20/2019arrow_forwardPROBLEM: Tagaytay Company's summary of cash records show the following for the year 2022, its first year of operation: CASH Transactions Debit Credit Cash receipts 1,280,000 Cash Disbursements 825.000 December 31 balances 455.000 You are contacted by the management to compute its net income using the accrual basis of accounting. During the process of preparation, the following were identified by you that will impact your computation: 1. Property, plant and equipment are depreciated on a straight line basis. Annual depreciation is P 105,000. 2. Prepaid insurance of P 18,000 was recognized as expense when it was paid. P 12,000 of the balance relates to year 2023. 3. The entire amount of P 120,000 which was received as advance rental for office space in its building was recognized as rent income when received. P 70,000 of the amount will be earned in 2023. 4. Employees are due P 28,000 at the end of 2022. 5. Uncollected interest from investment at the end of 2022 is P 31.700. 6. It is…arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College