WarrenSMChap13(MAN)

WarrenSMChap13(MAN) - CHAPTER 13 (MAN) STATEMENT OF CASH...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CHAPTER 13 (MAN) STATEMENT OF CASH FLOWS EYE OPENERS 1. It is costly to accumulate the data needed. 2. It focuses on the differences between net in- come and cash flows from operating activit- ies, and the data needed are generally more readily available and less costly to obtain than is the case for the direct method. 3. In a separate schedule of noncash investing and financing activities accompanying the statement of cash flows. 4. The $40,000 increase must be added to in- come from operations because the amount of cash paid to merchandise creditors was $40,000 less than the amount of purchases included in the cost of goods sold. 5. The $20,000 decrease in salaries payable should be deducted from income to determ- ine the amount of cash flows from operating activities. The effect of the decrease in the amount of salaries owed was to pay $20,000 more cash during the year than had been re- corded as an expense. 6. a. $12,000 gain b. Cash inflow of $72,000 c. The gain of $12,000 would be deducted from net income in determining net cash flow from operating activities; $72,000 would be reported as cash flow from in- vesting activities. 7. Cash flow from financing activitiesissu- ance of bonds, $6,240,000 8. a. Cash flow from investing activitiesdis- posal of fixed assets, $24,000 The $24,000 gain on asset disposal should be deducted from net income in determining cash flow from operating activities under the indirect method. b. No effect 9. The same. The amount reported as the net cash flow from operating activities is not af- fected by the use of the direct or indirect method. 10. Cash received from customers, cash pay- ments for merchandise, cash payments for operating expenses, cash payments for interest, cash payments for income taxes. 11. Reported in a separate schedule, as follows: Schedule of noncash financing activities: Issuance of stock for acquisitions................... $128 million 91 91 PRACTICE EXERCISES PE 131A (Man) a. Financing d. Financing b. Investing e. Operating c. Operating f. Operating PE 131B (Man) a. Operating d. Operating b. Financing e. Investing c. Investing f. Operating PE 132A (Man) Net income............................................................................................. $140,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation.................................................................................... 7,000 Amortization of patents................................................................. 2,600 Gain from sale of land................................................................... (15,000 ) Net cash flow from operating activities............................................. $134,600 PE 132B (Man) Net income............................................................................................. $86,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation....................................................................................Depreciation....
View Full Document

Page1 / 44

WarrenSMChap13(MAN) - CHAPTER 13 (MAN) STATEMENT OF CASH...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online