Class 9_28 & 29_10 - Ch 13-1

Class 9_28 & 29_10 - Ch 13-1 - Agenda Questions?...

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Page 1 Questions? Cash Flow wrap up Agenda
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Page 2 Below are the balance sheets of Nightlatch Company as of December 31, 2009 and 2010. On the following page is the incomplete statement of cash flows for 2010. Using the information in the balance sheet, information in the partially complete cash flow statement and the supplemental information given below, complete the cash flow statement and answer the interpretive questions that follow it. Supplemental information: There were no sales or other disposals of land during 2010. There were no repayments of notes payable during 2010. Cash Flow Practice
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Page 3 Nightlatch Company Balance Sheets as of December 31 2010 2009 Cash $469,000 $259,000 Accounts receivable 410,000 350,000 Inventory 580,000 500,000 Land 380,000 250,000 Equipment 800,000 750,000 Accumulated depreciation -480,000 -360,000 Total assets $2,159,000 $1,749,000 Accounts payable $300,000 $250,000 Salaries payables 200,000 290,000 Notes payable 500,000 300,000 Contributed capital 300,000 300,000 Retained earnings 859,000 609,000 Total Liab. And S/E $2,159,000 $1,749,000 Cash Flow Practice
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Page 4 Nightlatch Company Statement of Cash Flows For the year ended December 31, 2010 Net Income ? Depreciation Expense 120,000 Accounts Receivable ? Inventory -80,000 Accounts Payable ? Salaries Payable -90,000 Cash Flow from Operating Activities ? Investing: Land ? Equipment -50,000 Cash Flow from Investing Activities ? Financing: Note payable ? Dividends -150,000 Cash Flow from Financing Activities ? Net change in cash ? ? ? ? ? Cash Flow Practice
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Page 5 Interpretational questions: Why is depreciation expense added to the net income? Why is the inventory number subtracted from net income? What kind of transaction caused the equipment number? Briefly explain the difference between cash basis of accounting and the accrual basis of accounting. Cash Flow Practice
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Page 6 1 For the year 2009, Tally Corporation reported $120,000 pretax income (average annual income tax rate of 30%). Net income was A. $36,000. B. $56,000. C. $70,000. D. $84,000. 2 Burger Palace Corporation reports net cash used for investing activities of $3.4 million and a net cash provided by financing activities of $1.6 million. If cash increased by $1.1 million during the year, what was the net cash flow provided from operating activities? A. $0.7 million
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This note was uploaded on 12/17/2010 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas at Austin.

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Class 9_28 & 29_10 - Ch 13-1 - Agenda Questions?...

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