Seminar 06 Week 07 - 0902

Seminar 06 Week 07 - 0902 - S OLUTIONS TO SELF STUDY...

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Unformatted text preview: S OLUTIONS TO SELF STUDY QUESTIONS 2. The three activities are: Operating activities include: • the cash effects of revenue generating activities; • activities that are not classified as financing or investing activities. Investing activities include: • acquiring and disposing of investments and productive long-lived assets; • lending money and collecting loans. Financing activities include: • obtaining cash from issuing debt and repaying the amounts borrowed; • obtaining cash from shareholders and providing them with a return on their investment (paying dividends). 3. Significant non-cash financing and investing activities must be disclosed in a note so that users of financial reports are informed about all of the entity’s financing and investing activities, and not only those involving cash. B rief Exercise 11.1 Riley Ltd (a) (b) (c) (d) Cash inflow from financing activity, Cash outflow from investing activity, Cash inflow from investing activity Cash outflow from financing activity, 200,000 (150,000) 20,000 (50,000) B rief Exercise 11.2 Anita Baker Pty Ltd Statement of cash flows (partial) For the year ended 31 December 2009 Cash flows from financing activities 200,000 Issue of debentures (40,000) Payment of dividends Net cash provided by financing activities Page 8 of 16 160,000 E xercise 11.5 Thomas Ltd a) b) c) d) e) f) g) h) i) j) k) l) m) n) Investing activity Financing activity Investing activity Non-cash investing and financing activity Operating activity (reconciliation) Financing activity Operating activity Financing activity Operating activity (reconciliation) Financing activity Operating activity Noncash financing activity Investing activity (cash proceeds from sale) Operating activity Page 9 of 16 P roblem Set A 11.5 a) Tasman Oak Ltd Statement of cash flows for the year ended 31 March 2009 Cash flows from operating activities Cash receipts from customers Cash payments To suppliers For operating expenses For interest expense For income taxes Net cash provided by operating activities 284,200 100,410 15,110 2,230 7,000 Cash flows from investing activities Purchase of investments Sale of machinery Sale of P&E Net cash provided by investing activities (14,000) 1,500 (85,000) Cash flows from financing activities Issue of shares Redemption of debentures Payment of cash dividends Net cash provided by financing activities (124,750) 159,450 35,000 (15,000) (22,350) (97,500) (2,350) Net increase in cash Cash at beginning of period Cash at end of period 59,600 38,400 98,000 Calculation: (1) Cash receipts from customers: Sales Deduct: Increase in accounts receivable Cash receipts from customers (2) Cash payments to suppliers: Cost of goods sold Add: Increase in inventory Cost of purchases Deduct: Increase in accounts payable Cash payments to suppliers (3) Cash payments for operating expenses: Operating expenses Add: Increase in prepaid expenses Add: Decrease in accrued expenses payable Cash payments for operating expenses Page 10 of 16 342,000 (57,800) 284,200 115,460 9,650 125,110 (24,700) 100,410 12,410 2,400 300 2,700 15,110 NOTE TO STUDENTS: The following solution for the Note to Statement of cash flows is included for completeness. You will cover this part of Statement of cash flows in next week’s lecture (Week 8). It is suggested students attempt this part of the question upon completion of your lecture next week. b) Tasman Oak Ltd Note to Statement of cash flows for the year ended 31 March 2009 Reconciliation of profit to cash provided by operating activities. Profit Adjustments to reconcile profit to net cash provided by operating activities: Depreciation expense Loss on sale of machinery Increase in accounts receivable Increase in inventory Increase in prepaid expenses Increase in accounts payable Decrease in accrued expenses payable Net cash provided by operating activities Page 11 of 16 150,900 46,500 7,500 (57,800) (9,650) (2,400) 24,700 (300) 8,550 159,450 P roblem Set A 11.7 a) Camel Couriers Ltd Statement of cash flows (partial) For the year ended 31 March 2009 Cash flows from operating activities Cash receipts from customers Cash payments For operating expenses 291,000 88,000 For income taxes Net cash provided by operating activities Calculation: (1) Cash receipts from customers: Revenues Deduct: Increase in accounts receivable Cash receipts from customers 379,000 191,000 580,000 (10,000) 570,000 (2) Cash payments for operating expenses: Operating expenses Add: Decrease in accounts payable ($41,000 - $30,000) Cash payments for operating expenses 280,000 11,000 291,000 (3) Income tax expense: Deduct: Increase income taxes payable ($6,000 - $4,000) Cash payments for income taxes NOTE TO STUDENTS: 570,000 90,000 (2,000) 88,000 The following solution for the Note to Statement of cash flows is included for completeness. You will cover this part of Statement of cash flows in next week’s lecture (Week 8). It is suggested students attempt this part of the question upon completion of your lecture next week. b) Camel Couriers Ltd Note to Partial Statement of cash flows for the year ended 31 March 2009 Reconciliation of profit to cash provided by operating activities. Profit Adjustments to reconcile profit to net cash provided by operating activities: Increase in accounts receivable Decrease in accounts payable Increase in income taxes payable Net cash provided by operating activities Page 12 of 16 210,000 (10,000) (11,000) 2,000 (19,000) (191,000) P roblem Set A 11.8 a) Swan Lake Cruises Ltd Statement of cash flows for the year ended 31 December 2010 Cash flows from operating activities Cash receipts from customers Cash payments To suppliers 183,000 For operating expenses 33,000 For interest expense 2,000 12,000 For income taxes Net cash provided by operating activities Cash flows from investing activities Sale of equipment Purchase of motors Net cash provided by investing activities (230,000) 16,000 10,000 (7,000) Cash flows from financing activities Issue of shares Issue of debentures Payment of cash dividends Net cash provided by financing activities 246,000 5,000 5,000 (12,000) 3,000 (2,000) Net increase in cash Cash at beginning of period Cash at end of period 17,000 13,000 30,000 Calculation: (1) Cash receipts from customers: Sales Deduct: Increase in accounts receivable Cash receipts from customers 250,000 (4,000) 246,000 (2) Cash payments to suppliers: Cost of goods sold Deduct: Decrease in inventory Cost of purchases Add: Decrease in accounts payable Cash payments to suppliers 180,000 (1,000) 179,000 4,000 183,000 (3) Operating expenses (28,000 + 16,000) Less: Depreciation (4) Income tax expense: Deduct: Increase income taxes payable ($6,000 - $4,000) Cash payments for income taxes Page 13 of 16 44,000 (11,000) 33,000 7,000 5,000 12,000 NOTE TO STUDENTS: The following solution for the Note to Statement of cash flows is included for completeness. You will cover this part of Statement of cash flows in next week’s lecture (Week 8). It is suggested students attempt this part of the question upon completion of your lecture next week. b) Swan Lake Cruises Ltd Note to Statement of cash flows for the year ended 31 December 2010 Reconciliation of profit to cash provided by operating activities. Profit Adjustments to reconcile profit to net cash provided by operating activities: Depreciation expense Increase in accounts receivable Decrease in inventory Decrease in accounts payable Decrease in income taxes payable Net cash provided by operating activities Page 14 of 16 17,000 11,000 (4,000) 1,000 (4,000) (5,000) (1,000) 16,000 ...
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